For the year ended December 31, 2012, Finco, Inc., reported earnings per share o
ID: 2474720 • Letter: F
Question
For the year ended December 31, 2012, Finco, Inc., reported earnings per share of $5.30. During 2013, the company had a 3-for-1 stock split. Calculate the 2012 earnings per share that will be reported in Finco's 2013 annual report for comparative purposes. (Round your answer to 2 decimal places.)
}uetr":ontidaliValeabtTarst,"uetr":ederswAnis,"""":ontiipcres_dab"t},:{2"_6,"0]:[7"_6,"llnu":51"_l,ul:n6"_2,"{}":32"_e,lsfa":42"_1,:-0"_5,"-1":24"_1,:-1"_3,":05""_0,":_4,"seal:f8"_4,"{}":37"_],9}23":77"_2,:64"_3{":[3"_2,"uetr":45"_",e1tlTiw%20Ne:"e"am"n],e}ru:t7"_4,":14"_5,"[]":33"_},7""7":c1,"0"12:"0""c:{9"_1,""}24:"0"{"":59"_],}]uetr":57"_},%3B"px25%201t:ef%20lx%3B2p:%20op%20tx%3B2p%202t:ghei%20hx%3B5p%207h:dtwi:"8""_",seonsprer%20beumeNylst:"7""_},t"ghri:"8"_6,"uetr":43"_",ONTILUSO:"6"_7{"":55"_},"}"%24":81"_2,":53"_2,":21"_e,ru:t3"_6{"":55"_",CYENRRCU:"3"_7{"":29"_},"}771.:"5"_7{"":_0,""}:"9"_7,"~"szepdjaa"~":75"_:{6"_5,""}:"9"_7,"""":75"_:{0"_3{"":_2{"":20"_,{}}%3B"1)21,%2063%2017,13b(rg:%20orol-cndougrckba:"8""_},)"11%2023,16,%2037(1gb"r":_9,"N"IOSTUE"Q":76"_:{5"_5,"}}""":79"_",reha%20ser%20pgsinrnEa:"5"_7{"":30"_:{2""_:{0"_2{"[[":13"_e,lsfa":41"_},n"owpDro"d":27"_1,:-5"_2,"{}":75"_e,lsfa":82"_:{8"_2,"""":22"_e,lsfa":35"_e,ru:t6"_3,"{}":55"_",leab%20TedtltiUn:"9"_6,":27"_1,":18"_5{":[5"_6{"
Additionally, during 2014, Finco had a 4-for-1 stock split. Calculate the 2012 earnings per share that will be reported in Finco's 2014 annual report for comparative purposes. (Round your answer to 2 decimal places.)
}uetr":ontidaliValeabtTarst,"uetr":ederswAnis,"""":ontiipcres_dab"t},:{2"_6,"0]:[7"_6,"llnu":51"_l,ul:n6"_2,"{}":32"_e,lsfa":42"_1,:-0"_5,"-1":24"_1,:-1"_3,":05""_0,":_4,"seal:f8"_4,"{}":37"_],0}26":77"_2,:64"_3{":[3"_2,"uetr":45"_",e1tlTiw%20Ne:"e"am"n],e}ru:t7"_4,":14"_5,"[]":33"_},0"10:"1""c",18"1":c0{"":19"_},4""2":"0:{9"_5,"]]e}ru:t7"_5,""}x%3B3p12:%20ftle%3B%20px%202p:to%3B%20px22:%20htighe%3B%20px98:%20thid"w":_8,"e"ncraleToueal%20vseonsprer%20beumeNylst:"7""_",ueal"v":70"_1,.0:01"_7,""}htig"r":68"_e,ru:t3"_4,"N"IOUTOL"S":76"_:{5"_5,"}}%24":"1"_8,":23"_5,":21"_2,"uetr":63"_:{5"_5,"Y"NCREUR"C":73"_:{9"_2,"}}4".4"0":75"_:{0""_},""":79"_",s~epdjba"~":75"_:{6"_5,""}:"9"_7,"""":75"_:{0"_3{"":_2{"":20"_,{}}%3B"1)21,%2063%2017,13b(rg:%20orol-cndougrckba:"8""_},)"11%2023,16,%2037(1gb"r":_9,"N"IOSTUE"Q":76"_:{5"_5,"}}""":79"_",reha%20ser%20pgsinrnEa:"5"_7{"":30"_:{2""_:{0"_2{"[[":13"_e,lsfa":41"_},n"owpDro"d":27"_1,:-5"_2,"{}":75"_e,lsfa":82"_:{8"_2,"""":22"_e,lsfa":35"_e,ru:t6"_3,"{}":55"_",leab%20TedtltiUn:"9"_6,":27"_1,":18"_5{":[5"_6{"
If Finco had issued a 9% stock dividend in 2013 and did not have a stock split, calculate the 2012 earnings per share that will be reported in Finco's 2013 annual report for comparative purposes.
Answer the following questions:Explanation / Answer
Earnings Per Share and a Split
Earnings per share refers to the net earnings - profits - earned by a company divided by the number of shares outstanding. A stock split increases the number of shares, and the amount of profit earned does not change, so a split will result in a lower earnings per share amount. Example 2-for-1 stock split will result in an EPS of half the amount of the pre-split earnings or what the earnings would have been had the split not occurred. The stock split effect on EPS is the increase in number of company shares due to the split declaration.
Stock Split – 3-for-1
So EPS = $5.30 / 3 = $1.77 /share
Stock Split – 4-for-1
EPS after 2013 Stock Split - $1.77 / share
So EPS = $1.77 / 4 = $0.44 / share
Stock Dividend – 9% in 2013
Being Dividend issued in 2013 there will be no effect on the EPS for 2012.
So EPS = $5.30 / share