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Elite Trailer Parks has an operating profit of $293,000. Interest expense for the year was $38,800;...

Elite Trailer Parks has an operating profit of $293,000. Interest expense for the year was $38,800; preferred dividends paid were $31,500; and common dividends paid were $36,900. The tax was $65,500. The firm has 20,200 shares of common stock outstanding.  

a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.)  
  



b. What was the increase in retained earnings for the year?  
  

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Answer #1

a. The earnings per share is computed as shown below:

= ( operating profit - interest expenses - tax expenses - preferred dividends) / number of common shares outstanding

= ( $ 293,000 - $ 38,800 - $ 65,500 - $ 31,500) / 20,200

= $ 7.78 Approximately

Common dividend per share is computed as shown below:

= Common dividend paid / Number of common shares outstanding

= $ 36,900 / 20,200

= $ 1.83 Approximately

b. The increase in retained earnings is computed as shown below:

= operating profit - interest expenses - tax expenses - preferred dividends - common dividends paid

= $ 293,000 - $ 38,800 - $ 65,500 - $ 31,500 - $ 36,900

= $ 120,300

Feel free to ask in case of any query relating to this question

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