Reference no: EM132595060
Question - Abbie and Alphonse Pastry have invested their life savings in a new venture, a small cake company located in central Illinois. After three years they are starting to make some serious money, so they decided to incorporate their business into a Subchapter S corporation. They now have 50 stockholders, including both of them. Once the company went public, the company issued $10 million in common stock, elected a board of directors, and the board elected Bertha Bigg as their first Chair of the Board. At that time, (June 30, 2016), Abbie and Allphonse decided to resign from the board, but agreed to stay on as the Chief Executive Officer and Chief Financial Officer.
Two more years have passed and they now see the following information from their income statement:
Revenues for fiscal year ending June 30, 2018, was $4,450,000 and net income was $400,000. The net shares outstanding during the year were 125,000 shares. Abbie and Alphonse thought it would be a good idea to distribute dividends to the stockholders for the 2018 fiscal year. The stockholders were pleased with the dividend distribution.
Answer the Following:
1. What were the Earnings per share for fiscal year ending June 30, 2018?
2. What were the dividends per share for fiscal year ending June 30, 2018?
3. Comment upon the quality of advice Abbie and Alphonse gave to the board members regarding distributing dividends to the shareholders.
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