Sol-tex has net income of $1,300,000 and 400,000 shares outstanding. it has preferred dividends of $300,000. what are the earnings per share?

To find the earnings per share (EPS) the equation is as follows:

EPS = (net income - dividends on preferred stock) / average outstanding common shares

EPS = (1,300,000-300,000) / 400,000

EPS = 1,000,000/400,000

EPS = 2.50

Sol-tex has an earnings per share of $2.50