Earnings per share: Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’. The following formula can be used to calculate earnings per share: Earnings per share = Net income ( loss ) – Preferred dividends Average number of common shares outstanding To compute: Earnings per share of Incorporation A and company W.

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Answer 1

Question

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

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Answer 2

Question

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

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Answer 3

Question

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

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Answer 4

Question

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

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Answer 5

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Answer 6

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

Answer 7

Chapter 12, Problem 1ADM

A.

To determine

Earnings per share:

Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

$Earnings per share = Net income(loss) – Preferred dividendsAverage number of common shares outstanding$

To compute: Earnings per share of Incorporation A and company W.

Answer 8

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

Answer 9

B.

To determine

To identify: The company which appears to be more profitable on the basis of earnings per share.

Answer 10

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Answer 11

C.

To determine

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Answer 12

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Answer 23

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Solution Summary: The author explains how to calculate earnings per share of Incorporation A and company W.

To identify: The company which appears to be more profitable on the basis of earnings per share.

To explain: The possible reasons behind the differences between the Incorporation A and Company W’s market price per share and earnings price per share.

Chapter 12 Solutions