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For the year ended December 31, 2018, Finco Inc. reported earnings per share of $3.60. Answer the following questions: Requir
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Finco Inc

  1. Determination of the 2018 earnings per share that would be reported in in Finco’s 2019 annual report for comparative purposes:

December 31, 2018 Earnings per share = $3.60

Stock split in 2019 is 5 for 1,

A stock split indicates issue of new shares to current shareholders in proportion to their existing shares.

Adjusting earnings per share = original earnings per share/proportion of stock split

= 3.60/5 = $0.72

Hence, EPS for 2019 reporting purposes = $0.72

  1. Determination of the 2018 earnings per share that would be reported in in Finco’s 2020 annual report for comparative purposes:

Adjusted Earnings per share = $0.72

Stock split in 2020 is 3 for 1,

A stock split indicates issue of new shares to current shareholders in proportion to their existing shares.

Adjusting earnings per share = original earnings per share/proportion of stock split

= 0.72/3 = $0.24

Hence, EPS for 2020 reporting purposes = $0.24

  1. Determination of the 2018 earnings per share that would be reported in in Finco’s 2019 annual report for comparative purposes:

December 31, 2018 Earnings per share = $3.60

Stock dividend – 11%

ting earnings per share = original earnings per share/percent of stock dividend

= 3.60/11 = $0.33

Hence, EPS for 2019 reporting purposes = $0.33

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