Question

Suppose the following information is available for Callaway Golf Company for the years 2017 and 2016. (Dollars are in thousands, except share information.) 2017 2016 Net sales $ 1,128,000 $ 1,135,100 Net income (loss) 123,785 42,510 Total assets 863,338 846,078 Share information Shares outstanding at year-end 60,900,000 69,400,000 Preferred dividends 0 0 There were 72,300,000 shares outstanding at the end of 2015. (a) What was the company’s earnings per share for each year? (Round answers to 2 decimal places, e.g. 15.25.) 2017 : $ 2016 :

Answer 1

	2015	2016	2017
Number of outstanding shares at the year end	72,300,000	69,400,000	60,900,000

	2016	2017
Net income	42,510,000	123,785,000

Average Number of outstanding share at the end of year 2016 = (Number of outstanding shares at the end of year 2015 + Number of outstanding shares at the end of year 2016)/2

= (72,300,000+69,400,000)/2

= 70,850,000

Earning per share for year 2016 = Net income for 2016 / Average Number of outstanding share at the end of year 2016

= 42,510,000/70,850,000

= $0.60

Average Number of outstanding share at the end of year 2017 = (Number of outstanding shares at the end of year 2016 + Number of outstanding shares at the end of year 2017)/2

= (69,400,000+60,900,000)/2

= 65,150,000

Earning per share for year 2017 = Net income for 2017 / Average Number of outstanding share at the end of year 2017

= 123,785,000/65,150,000

= $1.90

	2016	2017
Earning per share	$0.60	$1.90