Papa Roach Exterminators, Inc., has sales of $694,000, costs of $235,000, depreciation expense of $42,000, interest...

Papa Roach Exterminators, Inc., has sales of $694,000, costs of $235,000, depreciation expense of $42,000, interest expense of $33,000, and a tax rate of 35 percent. The firm paid out $109,000 in cash dividends, and has 20,000 shares of common stock outstanding. (a) What is the earnings per share, or EPS, figure? (Click to select) (b) What is the dividends per share figure?

Expert Solution

- Preparing Income Statement:-

Particular	Amount in $
Sales	694,000.00
Less: COGS	(235,000.00)
Gross Profit	459,000.00
Less: Depreciation	(42,000.00)
EBIT	417,000.00
Less: Interest Expense	(33,000.00)
Taxable Income	384,000.00
Less: Taxation (35%)	(134,400.00)
Net income	249,600.00

a). Earnings Per Share(EPS) = Net Income/No of shares Outstanding

EPS = $249,600/20,000

EPS = $12.48 per share

b). Dividend per share = Dividends/No of shares outstanding

Dividend per share = $109,000/20,000 shares

Dividend per share = $5.45 per share

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jeff jeffy answered 1 year ago

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