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Chapter 2: 17BP (page 51)

Quantum Technology had \(669,000 of retained earnings on December 31, 20X2. The company paid common dividends of \)35,500 in 20X2 and had retained earnings of $576,000 on December 31, 20X1. How much did Quantum Technology earn during 20X2, and what would earnings per share be if 47,400 shares of common stock were outstanding?

Short Answer

Expert verified

The net earnings of the company during 20X2 was $128,500, and the earnings per share would be $2.71.

Step by step solution

01

Calculation of net earning of Quantum Technology during 20X2

Closing retained earning-Opening retained earning+Dividend paid

=$669,000-$576,000+35,500

=$128,500

02

Calculation of earning per share

EPS=NetEarningNo.ofsharesoutstanding=$128,50047,400=$2.71

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Most popular questions from this chapter

Sosa Diet Supplements had earnings after taxes of $800,000 in 20X1 with 200,000 shares of stock outstanding. On January 1, 20X2, the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 30 percent.

a. Compute earnings per share for the year 20X1.

b. Compute earnings per share for the year 20X2.

Jerry Rice and Grain Stores has \(4,780,000 in yearly sales. The firm earns 4.5 percent on each dollar of sales and turns over its assets 2.7 times per year. It has \)123,000 in current liabilities and $349,000 in long-term liabilities.

b. If the asset base remains the same as computed in part a, but total asset

turnover goes up to 3, what will be the new return on stockholders’ equity?Assume that the profit margin stays the same as do current and long-term

liabilities.

What are the three primary sections of the statement of cash flows? In what section would the payment of a cash dividend be shown?

The Haines Corp. shows the following financial data for 20X1 and 20X2:

20X1

20X2

Sales

\(3,230,000

\)3,370,000

Cost of goods sold

2,130,000

2,850,000

Gross profits

\(1,100,000

\)520,000

Selling and administrative expenses

298,000

227,000

Operating profits

\(802,000

\)293,000

Interest expense

47,200

51,600

Income before taxes

\(754,800

\)241,400

Taxes (35%)

264,180

84,490

Income after tax

\(490,620

\)156,910

For each year, compute the following and indicate whether it is increasing or

decreasing profitability in 20X2 as indicated by the ratio:

c. Interest expenses to sales

What advantage does the fixed charge coverage ratio offer over simply using times interest earned?
See all solutions

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