Income Statement for CharmCorp: 2008 2009 Total sales 600 540 Cost of sales - 532 -488 Gross Profit 68 52 Selling, general, and administrative expenses Research and development Depreciation and amortization Operating Income Other income Earnings before interest - 21 - 5 -5 - 36 - 4 -5 23 21 1
Income Statement for CharmCorp: 2008 2009 Total sales 600 540 Cost of sales - 532 -488 Gross Profit 68 52 Selling, general, and administrative expenses Research and development Depreciation and amortization Operating Income Other income Earnings before interest - 21 - 5 -5 - 36 - 4 -5 23 21 1
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Income Statement for CharmCorp:
2008
2009
Total sales
600
540
Cost of sales
- 532
-488
52
Gross Profit
68
Selling, general,
and administrative expenses
Research and development
Depreciation and amortization
Operating Income
Other income
Earnings before interest
and taxes (EBIT)
-36
-21
- 4
- 5
- 5
- 5
23
21
1.
24
26
Interest income (ovnensel
-7
- 7
O A. $1.87
O B. $1.56
O C. $1.24
O D. $0.78
Transcribed Image Text:- 36
- 21
and administrative expenses
Research and development
Depreciation and amortization
Operating Income
Other income
Earnings before interest
and taxes (EBIT)
Interest income (expense)_
Pretax income
- 4
- 5
- 5
-5
23
21
1.
24
26
- 7
14
19
- 4
- 5
Taxes
Net Income
10
14
Consider the above Income Statement for CharmCorp. All values are in millions of dollars. If CharmCorp. has 7 million shares outstanding, and its managers and employees have stock options
for 2 million shares, what is its diluted EPS in 2009?
A. $1.87
B. $1.56
C. $1.24
D. $0.78
Expert Solution
Step 1
The EPS (earning per share) is the amount that is earned by shareholders after net income. The EPS is computed by the net income divided by the total outstanding share.
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