Manjit’s Mannequin Supply Inc. (MMSI) was incorporated on January 1, 2017. At that time, it issued 50,000 ordinary shares and 30,000, $100, 5% non-cumulative preferred shares. Transactions throughout 2018 affecting MMSI’s shareholdings follow: 

a. March 1: MMSI issued 20,000 ordinary shares. 

b. April 1: MMSI issued $2,000,000 in 3% cumulative preferred shares. 

c. July 1: MMSI declared and issued a 15% stock dividend on the ordinary shares. 

d. August 1: MMSI repurchased 30,500 ordinary shares and held them as treasury shares. 

e. October 1: MMSI declared and issued a two-for-one stock split on the ordinary shares. 

f. MMSI’s net income for the year ended December 31, 2018, was $500,000. It neither declared nor paid dividends during the year. 

Required: 

a. What was MMSI’s weighted average number of ordinary shares outstanding in 2018? 

b. What was MMSI’s basic EPS for 2018? 

c. If the preferred shares issued on April 1, 2018, were non-cumulative, what would MMSI’s basic EPS for 2018 have been? 

d. Based on your answer to part (b), what would the price–earnings ratio be if the market price of the stock was $30?