   Chapter 9, Problem 13CDQ

Chapter
Section
Textbook Problem

The net income (after income tax) of Fleming Inc. was $4.80 per Common share in the latest year and$7.50 per common share for the preceding war. At the beginning of the latest war, the number of shares outstanding was doubled by a stock split. There were no other changes in the amount of stock outstanding. Whit were the earnings per share in the preceding war, adjusted for comparison with the latest year?

To determine

Concept Introduction:

Basic Earnings per share:

The Basic Earnings per share is the amount of net income earned by each common share outstanding. The Earnings per share calculated by with help of following formula:

Basic Earnings per share=Net Income - Preferred DividendWeighted Average Common Shares Outstanding

Net Income available to common stockholder = Net income  Preferred Dividend

To Calculate:

The Adjusted Earnings per share for the preceding year

Explanation

The Adjusted Earnings per share for the preceding year is calculated as follows:

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