Suppose that U.S. had 200 million shares outstanding at the end of 2002. Based on the income statement in Table 2.2, what was EPS? What were dividends per share?

Question

Table 2.2

U.S. CORPORATION
2002 Income Statement
($ in millions)
Net sales $1,509
Cost of goods sold 750
Depreciation [latex]\underline{65}[/latex]
Earnings before interest and taxes $ 694
Interest paid [latex]\underline{70}[/latex]
Taxable income $ 624
Taxes [latex]\underline{212}[/latex]
Net income $ [latex]\underline{\underline{412}}[/latex]
Dividends $103
Addition to retained earnings 309

Accepted Answer

From the income statement, we see that U.S. had a net income of $412 million for the year. Total dividends were $103 million. Because 200 million shares were outstanding, we can calculate earnings per share, or EPS, and dividends per share as follows:

Earnings per share = Net income/Total shares outstanding
= $412/200 = $2.06 per share
Dividends per share =Total dividends/Total shares outstanding
= $103/200 = $.515 per share

Question 2.3: Suppose that U.S. had 200 million shares outstanding at the ...

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