Question

Calculation of EPS and retained earnings  Everdeen Mining​, ​Inc., ended 2019 with net profits before taxes of $ 436 comma 000$436,000. The company is subject to a 21 %21% tax rate and must pay $ 64 comma 000$64,000 in preferred stock dividends before distributing any earnings on the 170 comma 000170,000 shares of common stock currently outstanding. a. Calculate​ Everdeen's 2019 earnings per share​ (EPS). b. If the firm paid common stock dividends of $ 0.80$0.80 per​ share, how many dollars would go to retained​ earnings? a. The​ firm's EPS is ​$nothing. ​ (Round to the nearest​ cent.)

Answer 1

Net profit before taxes	$       436000
(-) Tax @21%	$         -91560
Net income	$       344440

a. Earnings per share = ( net income - Preferred dividend ) / Total shares of common stock outstanding	=(344440 - 64000 ) / 170000
	$1.65

b.

Net income	$         344440
(-) Preferred dividend	$           -64000
(-) Common dividend [ 170000 shares * $0.80 ]	$       -136000
Amount that will go to retained earnings	$         144440