The 2010 annual report of Software City, Inc., included the following comparativ
ID: 2346531 • Letter: T
Question
The 2010 annual report of Software City, Inc., included the following comparative summary of earnings per share over the last three years:
Earnings per share
2010- $3.15
2009- $2.40
2008- $1.64
In 2011, Software City, Inc., declared and distributed a 100 percent stock dividend. Following this stock dividend, the company reported earnings per share of $1.88 for 2011.
a. Prepare a three-year schedule similar to the one above, but compare earnings per share during the years 2011, 2010, and 2009. (Hint: All per-share amounts in your schedule should be based on the number of shares outstanding after the stock dividend.)
Earnings per share
2010-
2009-
2008-
Explanation / Answer
100% stock dividend means no. of outstanding shares will be doubled, and so EPS will be halved So Earnings per share: 2011: $1.88 2010: $3.15/2 = $1.575 = $1.58 2009: $2.40/2 = $1.20
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