Question 1
Multiple ChoiceFor 2024, Coral Bay Co. reported net income of USD2,400,000. At 1 January 2024, there were 2,000,000 shares outstanding. On 1 October 2024, the company issued 200,000 new shares. Coral Bay paid USD400,000 in dividends to common shareholders during the year.
What is Coral Bay’s basic earnings per share (EPS) for 2024?
Explanation
Step 1: Calculate weighted average shares outstanding
2,000,000 shares × 9/12 = 1,500,000
2,200,000 shares × 3/12 = 550,000
Total weighted average = 1,500,000 + 550,000 = 2,050,000 shares
Step 2: Calculate basic EPS
EPS = \frac{Net Income}{Weighted Average Shares} = \frac{2,400,000}{2,050,000} = 1.17