Can you please help me answering this question, please! Help me, 164 points M11-

Question

Can you please help me answering this question, please! Help me, 164 points M11-13 Calculating and Interpreting Earnings per Share (EPS) and Return on Equity (ROE) [LO Academy Driving School reported the following amounts in its financial statements: Number of common shares Net income Cash dividends paid on common stock Total stockholders' equity 12,200 12,200 $ 32,940 27,940 3,700 3,700 $310,000 $290,000 Calculate EPS and ROE for year 2. (Round EPS to 2 decimal places and ROE to 1 decimal place.) ear 2 EPS ROE

Explanation / Answer

EPS = Net Income / Total outstanding common shares

EPS = 27940 / 12200 = $2.29 / Share

ROE = Net Income / Average Stockholder's equity

Average Stockholder's equity = {Beginning amount(year1) + Closing Amount (Year 2)} / 2

Average Stockholder's equity = {310000 + 290000} / 2 = 300000

ROE = 27940 / 300000 = 0.093133 ~ 9.3%

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