Chapter 7
Corporations: The Financial Statements
367
Analysis
In this chapter, you have learned how to calculate earnings per share. Often, a corporation’s
annual report will report earnings per share as calculated by the corporation. Rarely do the
corporation’s reported earnings per share agree with a financial analyst’s calculation of this
number. Discuss why these two calculations may differ.
AP-13B
(
6
)
Marry Inc. provided the following information from its accounting records for the years
ending December 31, 2017 and 2016.
2014
2013
Income from continuing operations (net of tax)
$840,000
$740,000
Income from discontinued operations (net of tax)
150,000
70,000
Net income
990,000
810,000
Each year, 100,000 common shares were outstanding
1,000,000
1,000,000
Beginning retained earnings
1,990,000
1,580,000
Current liabilities
560,000
420,000
Non-current debt
980,000
760,000
Market price per share
15
13
Total dividends paid
500,000
400,000
No shares were issued or redeemed during the two years. The company has never issued any
preferred shares.
Required
Calculate the following ratios for both years.
