Question

A firm has the following accounts and financial data for 2015, use these data to calculate the firm’s earning per share (EPS) for 2015?

Accumulated Depreciation (2014)	$ 450,000	Selling and Marketing Expense	$ 105,000
Sales Revenue	$ 925,000	Tax Rate	(34%)
Accounts Receivables	$ 600	Number of common shares outstanding	100,000
Interest Expense	$ 55,000	Cost of Goods Sold	$ 50,000
Accumulated Depreciation (2015)	$ 575,000	Research and Development Expense	$ 50,000
General and Administrative Expense	$ 120,000	Marketable Securities	$ 147,000
Long-Term Debt	$70,000	Preferred Stock Dividends	$ 77,000

Answer 1

- Calculating the Firm's Earnings per share(EPS):-

Particular	Amount in $
Sales Revenue	925,000.00
Less: Costs of Goods Sold	(50,000.00)
Less: Depreciation(Note)	(125,000.00)
Less: General and Administrative Expense	(120,000.00)
Less: Research and Development Expense	(50,000.00)
Less: Selling and Marketing Expense	(105,000.00)
EBIT	475,000.00
Interest Expenses	(55,000.00)
Earning before tax	420,000.00
Taxes @34%	(142,800.00)
Net Income (a)	277,200.00
No of common shares outstanding (b)	100,000.00
Earnings per Share(EPS) [(a)/(b)]	2.772

Note- Depreciation for year = Accumulated Depreciation of 2015 - Accumulated Depreciation of 2015

=$575,000 - $450,000

= $125,000