# Calculation of EPS and Retained Earnings Everdeen Mining,...

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Calculation of EPS and Retained Earnings Everdeen Mining, Inc., ended 2015 with a net profit before taxes of \$436,000. The company is subject to a 40% tax rate and must pay \$64,000 in preferred stock dividends before distributing any earnings on the 170,000 shares of common stock currently outstanding. A. Calculate Everdeen's 2015 earnings per share (EPS).
B. If the firm paid common stock dividends of \$0.80 per share, how many dollars would go to retained earrings?
Ratio Comparisons Robert Arias recently inherited a sotck portfolio from his uncle. Wishing to learn more about the companies in which he is now invested, Robert performs a ratio analysis on each one and decides to compare them to one another. Some of his ratios are listed below. Ratio Island Electric Utility Burger Heaven Flink Software Roland Motors Current 1.1 1.3 6.8 4.5 Quick 0.9 0.82 5.2 3.7 Debt 0.68 0.46 0 0.35 6.20% 14.30% 28.50% 8.40% Assuming that his uncle was a wise investor who assembled the portfolio with care, Robert finds the wide differences in these ratios confusing. Help him out. A. What problems might Robert encounter in comparing these companies to one another on the basis of their ratios?
B. Why might the current and quick ratios for the electric utility and the fast-food stock be so much lower than the same rations for the other companies?