Earnings and dividend per share calculation
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For several years Orbon, Inc., has followed a policy of paying a cash dividend of $1.20 per share and having a 10% stock dividend. In the 2011 annual report, Orbon reported restated earnings per share for 2009 of $2.70.
(a) Calculate the originally reported earnings per share for 2009. (Round your answer to 2 decimal places)
(b) Calculate the restated cash dividend per share for 2009 reported in the 2011 annual report for comparative purposes. (Round your answer to 2 decimal places)
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Solution Summary
In this solution we made up some amounts to show you how the algebra works and then solve it for you.
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So this is about knowing how the stock dividend impacts the number of shares outstanding. Even though the earnings for 2009 did not change, the denominator, the number of shares, did change. And the change was compounded for two periods.
How much did the denominator change? 10% each year. A 10% stock dividend means ...
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