Suppose that U.S. had 200 million shares outstanding at the end of 1999. Based on the income statement in Table 2.2, what was EPS? What were dividends per share?

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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

Table 2.2

U.S. CORPORATION
1999 Income Statement
($ in millions)

$1,509	Net sales
750	Cost of goods sold
[latex]\underline{65}[/latex]	Depreciation
$694	Earnings before interest and taxes
[latex]\underline{70}[/latex]	Interest paid
$624	Taxable income
[latex]\underline{212}[/latex]	Taxes
[latex]\underline{\underline{\$412}}[/latex]	Net income
$103	Dividends
309	Addition to retained earnings

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

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