20Υ3 20Υ2 Net income $305,750 $263,000 Preferred dividends $47,000 $47,000 Average number of common shares outstanding 75,000 shares 60,000 shares a. Determine the earnings per share for 20Y3 and 20Y2. Round your answers to two decimal places. 20Υ3 %24 per share 20Υ2 per share b. Does the change in the earnings per share from 20Y2 to 20Y3 indicate a favorable or an unfavorable trend?
20Υ3 20Υ2 Net income $305,750 $263,000 Preferred dividends $47,000 $47,000 Average number of common shares outstanding 75,000 shares 60,000 shares a. Determine the earnings per share for 20Y3 and 20Y2. Round your answers to two decimal places. 20Υ3 %24 per share 20Υ2 per share b. Does the change in the earnings per share from 20Y2 to 20Y3 indicate a favorable or an unfavorable trend?
Chapter1: Financial Statements And Business Decisions
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![**Earnings Per Share Analysis**
**Financial Statement Data for Dovetail Corporation**
For the years ended December 31, the financial data for Dovetail Corporation are as follows:
| | 20Y3 | 20Y2 |
|---------|------------|------------|
| Net Income | $305,750 | $263,000 |
| Preferred Dividends | $47,000 | $47,000 |
| Average Number of Common Shares Outstanding | 75,000 shares | 60,000 shares |
**Tasks:**
a. **Determine the Earnings Per Share (EPS)** for 20Y3 and 20Y2. Round your answers to two decimal places.
- **EPS Calculation Formula:**
\[ \text{Earnings Per Share} = \frac{\text{Net Income} - \text{Preferred Dividends}}{\text{Average Number of Common Shares Outstanding}} \]
**20Y3:**
\[ \text{EPS} = \frac{\$305,750 - \$47,000}{75,000} \]
**20Y2:**
\[ \text{EPS} = \frac{\$263,000 - \$47,000}{60,000} \]
b. **Analysis:**
- Assess whether the change in earnings per share from 20Y2 to 20Y3 indicates a favorable or an unfavorable trend. Consider how the EPS growth or decline affects shareholder value and the financial health of the corporation.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b02c330-6640-4b1f-8ba6-54e2d4216bd8%2Fd57eeada-7370-48ce-b531-b45b4be96998%2Fr74z6y5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Earnings Per Share Analysis**
**Financial Statement Data for Dovetail Corporation**
For the years ended December 31, the financial data for Dovetail Corporation are as follows:
| | 20Y3 | 20Y2 |
|---------|------------|------------|
| Net Income | $305,750 | $263,000 |
| Preferred Dividends | $47,000 | $47,000 |
| Average Number of Common Shares Outstanding | 75,000 shares | 60,000 shares |
**Tasks:**
a. **Determine the Earnings Per Share (EPS)** for 20Y3 and 20Y2. Round your answers to two decimal places.
- **EPS Calculation Formula:**
\[ \text{Earnings Per Share} = \frac{\text{Net Income} - \text{Preferred Dividends}}{\text{Average Number of Common Shares Outstanding}} \]
**20Y3:**
\[ \text{EPS} = \frac{\$305,750 - \$47,000}{75,000} \]
**20Y2:**
\[ \text{EPS} = \frac{\$263,000 - \$47,000}{60,000} \]
b. **Analysis:**
- Assess whether the change in earnings per share from 20Y2 to 20Y3 indicates a favorable or an unfavorable trend. Consider how the EPS growth or decline affects shareholder value and the financial health of the corporation.
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