Podcast
Questions and Answers
The following information pertains the QRK Company:
- One million shares of common stock outstanding at the beginning of 2005.
- 200,000 shares issued on the last day of March.
- 500,000 shares issued on the last day of June.
- 800,000 shares issued on the last day of September.
What is the number of shares that should be used to compute 2005 earnings per share for the QRK Company?
The following information pertains the QRK Company:
- One million shares of common stock outstanding at the beginning of 2005.
- 200,000 shares issued on the last day of March.
- 500,000 shares issued on the last day of June.
- 800,000 shares issued on the last day of September.
What is the number of shares that should be used to compute 2005 earnings per share for the QRK Company?
- 1.6 million. (correct)
- 2.5 million.
- 1.9 million.
Suppose that JPK, Inc., paid dividends of $80,000 to its preferred shareholders and $40,000 to its common shareholders during 2004. The company had 20,000 shares of common stock issued and outstanding on January 1, 2004, issued 7,000 more shares on June 1, 2004, and paid a 10% stock dividend on August 1, 2004. Assuming that JPK had $150,000 in net income, what is the firm's basic earnings per share (EPS) for 2004?
Suppose that JPK, Inc., paid dividends of $80,000 to its preferred shareholders and $40,000 to its common shareholders during 2004. The company had 20,000 shares of common stock issued and outstanding on January 1, 2004, issued 7,000 more shares on June 1, 2004, and paid a 10% stock dividend on August 1, 2004. Assuming that JPK had $150,000 in net income, what is the firm's basic earnings per share (EPS) for 2004?
- $2.64. (correct)
- $2.91.
- $2.71.
Which of the following statements regarding basic and diluted EPS is least accurate?
Which of the following statements regarding basic and diluted EPS is least accurate?
- Antidilutive securities decrease EPS if they are exercised or converted. (correct)
- A simple capital structure contains no potentially dilutive securities.
- Dilutive securities decrease EPS if they are exercised or converted to common stock.
Which expense recognition method is most appropriate for intangible assets with indefinite lives?
Which expense recognition method is most appropriate for intangible assets with indefinite lives?
An analyst has gathered the following information about Artcraft, Inc. for the year:
- Net income of $30,000.
- 5,000 shares of common stock and 500 shares of 8%, $90 par convertible preferred stock outstanding during the whole year.
- Each share of convertible preferred can be converted into 4 shares of common stock.
- Last year, Artcraft issued at par, $60,000 total face value of 6.0% convertible bonds, with each of the 60 bonds convertible into 110 shares of the Artcraft common stock.
If Artcraft's effective tax rate is 40%, what will Artcraft report as diluted earnings per share (EPS)?
An analyst has gathered the following information about Artcraft, Inc. for the year:
- Net income of $30,000.
- 5,000 shares of common stock and 500 shares of 8%, $90 par convertible preferred stock outstanding during the whole year.
- Each share of convertible preferred can be converted into 4 shares of common stock.
- Last year, Artcraft issued at par, $60,000 total face value of 6.0% convertible bonds, with each of the 60 bonds convertible into 110 shares of the Artcraft common stock.
If Artcraft's effective tax rate is 40%, what will Artcraft report as diluted earnings per share (EPS)?
Selected information from Caledonia, Inc.'s financial activities in the year 20X6 is as follows:
- Net income = $460,000.
- 2,300,000 shares of common stock were outstanding on January 1.
- The average market price per share was $2 and the year-end stock price was $1.50.
- 1,000 shares of 8%, $1,000 par value preferred shares were outstanding on January 1. Preferred dividends were paid in 20X6.
- 10,000 warrants, each of which allows the holder to purchase 100 shares of common stock at an exercise price of $1.50 per common share, were outstanding the entire year.
Caledonia's diluted earnings per share for 20X6 are closest to:
Selected information from Caledonia, Inc.'s financial activities in the year 20X6 is as follows:
- Net income = $460,000.
- 2,300,000 shares of common stock were outstanding on January 1.
- The average market price per share was $2 and the year-end stock price was $1.50.
- 1,000 shares of 8%, $1,000 par value preferred shares were outstanding on January 1. Preferred dividends were paid in 20X6.
- 10,000 warrants, each of which allows the holder to purchase 100 shares of common stock at an exercise price of $1.50 per common share, were outstanding the entire year.
Caledonia's diluted earnings per share for 20X6 are closest to:
At the beginning of 2004, the Alaska Corporation had 2 million shares of common stock outstanding and no preferred stock. At the end of August, 2004, Alaska issued 600,000 new shares of common stock. If Alaska reported net income equal to $8.8 million, what was the firm's earnings per share for 2004?
At the beginning of 2004, the Alaska Corporation had 2 million shares of common stock outstanding and no preferred stock. At the end of August, 2004, Alaska issued 600,000 new shares of common stock. If Alaska reported net income equal to $8.8 million, what was the firm's earnings per share for 2004?
In calculating the numerator for diluted Earnings Per Share, the interest on convertible debt is:
In calculating the numerator for diluted Earnings Per Share, the interest on convertible debt is:
Consider the following information on the past year's operating performance and current capital structure for the following two companies:
Supple Moves
Perfect Collection
Paid no dividends
Paid common & pref. div.
Ave. Stock Price of $42.00
Ave. Stock Price of $22.00
Positive net income
Positive net income
110,000 warrants with an exercise price of $50.00
Convertible debt with an 8.0% coupon, conversion ratio at 10.0.
150,000 options outstanding with an exercise price of $19.50
Based on the information above, which of the companies has a complex capital structure?
Consider the following information on the past year's operating performance and current capital structure for the following two companies:
| Supple Moves | Perfect Collection | |
|---|---|---|
| Paid no dividends | Paid common & pref. div. | |
| Ave. Stock Price of $42.00 | Ave. Stock Price of $22.00 | |
| Positive net income | Positive net income | |
| 110,000 warrants with an exercise price of $50.00 | Convertible debt with an 8.0% coupon, conversion ratio at 10.0. | |
| 150,000 options outstanding with an exercise price of $19.50 |
Based on the information above, which of the companies has a complex capital structure?
A company has the following sequence of events regarding their stock:
- One million shares outstanding at the beginning of the year.
- On June 30th, they declared and issued a 10% stock dividend.
- On September 30th, they sold 400,000 shares of common stock at par.
Basic earnings per share at year-end will be computed on how many shares?
A company has the following sequence of events regarding their stock:
- One million shares outstanding at the beginning of the year.
- On June 30th, they declared and issued a 10% stock dividend.
- On September 30th, they sold 400,000 shares of common stock at par.
Basic earnings per share at year-end will be computed on how many shares?
Which type of a capital structure contains no dilutive securities?
Which type of a capital structure contains no dilutive securities?
Changes in asset lives and salvage values are changes in accounting:
Changes in asset lives and salvage values are changes in accounting:
Selected information from Feder Corp.'s financial activities for the year is as follows:
- Net income was $7,650,000.
- 1,100,000 shares of common stock were outstanding on January 1.
- The average market price per share was $62.
- Dividends were paid during the year.
- The tax rate was 40%.
- 10,000 shares of 6% $1,000 par value preferred shares convertible into common shares at a rate of 20 common shares for each preferred share were outstanding for the entire year.
- 70,000 options, which allow the holder to purchase 10 shares of common stock at an exercise price of $50 per common share, were outstanding the entire year.
Feder Corp.'s diluted earnings per share (EPS) was closest to:
Selected information from Feder Corp.'s financial activities for the year is as follows:
- Net income was $7,650,000.
- 1,100,000 shares of common stock were outstanding on January 1.
- The average market price per share was $62.
- Dividends were paid during the year.
- The tax rate was 40%.
- 10,000 shares of 6% $1,000 par value preferred shares convertible into common shares at a rate of 20 common shares for each preferred share were outstanding for the entire year.
- 70,000 options, which allow the holder to purchase 10 shares of common stock at an exercise price of $50 per common share, were outstanding the entire year.
Feder Corp.'s diluted earnings per share (EPS) was closest to:
Advantage Corp.'s capital structure was as follows:
December 31, 2005
December 31, 2004
Outstanding shares of stock:
Common
110,000
110,000
Convertible Preferred
10,000
10,000
% Convertible Bonds
$1,000,000
$1,000,000
During 2005, Advantage paid dividends of $3 per share on its preferred stock. The preferred shares are convertible into 20,000 shares of common stock. The 8% bonds are convertible into 30,000 shares of common stock. Net income for 2005 was $850,000. Assume the income tax rate is 30%.
Calculate Advantage's basic and diluted earnings per share (EPS) for 2005.
Advantage Corp.'s capital structure was as follows:
| December 31, 2005 | December 31, 2004 | |
|---|---|---|
| Outstanding shares of stock: | ||
| Common | 110,000 | 110,000 |
| Convertible Preferred | 10,000 | 10,000 |
| % Convertible Bonds | $1,000,000 | $1,000,000 |
During 2005, Advantage paid dividends of $3 per share on its preferred stock. The preferred shares are convertible into 20,000 shares of common stock. The 8% bonds are convertible into 30,000 shares of common stock. Net income for 2005 was $850,000. Assume the income tax rate is 30%.
Calculate Advantage's basic and diluted earnings per share (EPS) for 2005.
At the beginning of the year, BJC Company had 40,000 shares of $1 par common stock outstanding. On April 1, BJC issued a 2-for-1 stock split and on July 1, BJC reacquired 20,000 shares. On October 1, BJC issued 8,000 shares of $10 par, 5% cumulative preferred stock. How many shares should BJC use to calculate diluted earnings per share?
At the beginning of the year, BJC Company had 40,000 shares of $1 par common stock outstanding. On April 1, BJC issued a 2-for-1 stock split and on July 1, BJC reacquired 20,000 shares. On October 1, BJC issued 8,000 shares of $10 par, 5% cumulative preferred stock. How many shares should BJC use to calculate diluted earnings per share?
Last year, the AKB Company had net income equal to $5 million. Combined state and local taxes were 45%. The firm paid $1 million to holders of its 1 million common shares and $250,000 to 100,000 preferred shareholders. What was AKB's earnings per share (EPS) last year?
Last year, the AKB Company had net income equal to $5 million. Combined state and local taxes were 45%. The firm paid $1 million to holders of its 1 million common shares and $250,000 to 100,000 preferred shareholders. What was AKB's earnings per share (EPS) last year?
The approach to revenue recognition in the converged accounting standards that were issued in May 2014 is best described as:
The approach to revenue recognition in the converged accounting standards that were issued in May 2014 is best described as:
Maine Company's stock transactions during the year are described below:
January 1 100,000 common shares outstanding
March 1 2 for 1 stock split
August 1 10% stock dividend
The weighted average number of shares outstanding used to calculate earnings per share is:
Maine Company's stock transactions during the year are described below: January 1 100,000 common shares outstanding March 1 2 for 1 stock split August 1 10% stock dividend The weighted average number of shares outstanding used to calculate earnings per share is:
Examples of potentially dilutive securities least likely include:
Examples of potentially dilutive securities least likely include:
Selected information from Baltimore Corp's financial activities in the year 2004 is as follows:
- Net income was $4,200,000.
- 750,000 shares of common stock were outstanding on January 1.
- The average market price per share was $50 in 2004.
- Dividends were paid in 2004.
10,000 warrants, which allowed the holder to purchase 10 shares of common stock for each warrant held at a price of $40 per common share, were outstanding the entire year.
Baltimore's diluted earnings per share (Diluted EPS) for 2004 is closest to:
Selected information from Baltimore Corp's financial activities in the year 2004 is as follows:
- Net income was $4,200,000.
- 750,000 shares of common stock were outstanding on January 1.
- The average market price per share was $50 in 2004.
- Dividends were paid in 2004.
10,000 warrants, which allowed the holder to purchase 10 shares of common stock for each warrant held at a price of $40 per common share, were outstanding the entire year. Baltimore's diluted earnings per share (Diluted EPS) for 2004 is closest to:
A firm had the following numbers of shares outstanding during the year:
Beginning of year 8,000,000 shares
Issued on April 1 750,000 shares
Paid stock dividend of 20% on July 1
Issued on October 1 100,000 shares
Purchased Treasury stock November 1 1,000,000 shares
Split 2 for 1 on December 31
Based on this information, what is the weighted number of shares outstanding for the year?
A firm had the following numbers of shares outstanding during the year: Beginning of year 8,000,000 shares Issued on April 1 750,000 shares Paid stock dividend of 20% on July 1 Issued on October 1 100,000 shares Purchased Treasury stock November 1 1,000,000 shares Split 2 for 1 on December 31 Based on this information, what is the weighted number of shares outstanding for the year?
A simple capital structure is least likely to include:
A simple capital structure is least likely to include:
Stanley Corp. had 100,000 shares of common stock outstanding throughout 2004. It also had 20,000 stock options with an exercise price of $20 and another 20,000 options with an exercise price of $28. The average market price for the company's stock was $25 throughout the year. The stock closed at $30 on December 31, 2004. What are the number of shares used to calculate diluted earnings per share for the year?
Stanley Corp. had 100,000 shares of common stock outstanding throughout 2004. It also had 20,000 stock options with an exercise price of $20 and another 20,000 options with an exercise price of $28. The average market price for the company's stock was $25 throughout the year. The stock closed at $30 on December 31, 2004. What are the number of shares used to calculate diluted earnings per share for the year?
Under accrual accounting, revenues are recognized in the same period in which the associated:
Under accrual accounting, revenues are recognized in the same period in which the associated:
BWT, Inc. shows the following data in its financial statements at the end of the year. Assume all securities were outstanding for the entire year.
- 6.125% convertible bonds, convertible into 33 shares of common stock. Issue price $1,000, 100 bonds outstanding.
- 6.25% convertible preferred stock, $100 par, 2,315 shares outstanding. Convertible into 3.3 shares of common stock, Issue price $100.
- 8% convertible preferred stock, $100 par, 2,572 shares outstanding. Convertible into 5 common shares, Issue price $80.
- 9,986 warrants are outstanding with an exercise price of $38. Each warrant is convertible into 1 share of common. Average market price of common is $52.00 per share.
- Common shares outstanding at the beginning of the year were 40,045.
- Net Income for the period was $200,000, while the tax rate was 40%.
What are the basic and diluted EPS for the year?
BWT, Inc. shows the following data in its financial statements at the end of the year. Assume all securities were outstanding for the entire year.
- 6.125% convertible bonds, convertible into 33 shares of common stock. Issue price $1,000, 100 bonds outstanding.
- 6.25% convertible preferred stock, $100 par, 2,315 shares outstanding. Convertible into 3.3 shares of common stock, Issue price $100.
- 8% convertible preferred stock, $100 par, 2,572 shares outstanding. Convertible into 5 common shares, Issue price $80.
- 9,986 warrants are outstanding with an exercise price of $38. Each warrant is convertible into 1 share of common. Average market price of common is $52.00 per share.
- Common shares outstanding at the beginning of the year were 40,045.
- Net Income for the period was $200,000, while the tax rate was 40%.
What are the basic and diluted EPS for the year?
Securities that improve basic per share earnings, or reduce per share losses, if they are exercised or converted to common stock are called:
Securities that improve basic per share earnings, or reduce per share losses, if they are exercised or converted to common stock are called:
When considering convertible preferred stock which of the following components of the earnings per share (EPS) equation needs to be adjusted to calculate diluted earnings per share?
When considering convertible preferred stock which of the following components of the earnings per share (EPS) equation needs to be adjusted to calculate diluted earnings per share?
Flashcards
Weighted Average Shares Outstanding
Weighted Average Shares Outstanding
Shares outstanding during the year weighted by the portion of the year they were outstanding.
Basic Earnings Per Share (EPS)
Basic Earnings Per Share (EPS)
(Net Income - Preferred Dividends) / Weighted Average Common Shares Outstanding
Potentially Dilutive Securities
Potentially Dilutive Securities
Securities that have the potential to decrease EPS if converted or exercised.
Complex Capital Structure
Complex Capital Structure
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Simple Capital Structure
Simple Capital Structure
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Prospective Application
Prospective Application
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Retroactive Adjustment for Stock Splits/Dividends
Retroactive Adjustment for Stock Splits/Dividends
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Treasury Stock Method
Treasury Stock Method
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Antidilutive Securities
Antidilutive Securities
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Diluted Earnings Per Share (EPS)
Diluted Earnings Per Share (EPS)
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Intangible Assets with Indefinite Lives
Intangible Assets with Indefinite Lives
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Revenue Recognition
Revenue Recognition
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Matching Principle
Matching Principle
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Earnings Per Share (EPS)
Earnings Per Share (EPS)
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Characteristics of a Complex Capital Structure
Characteristics of a Complex Capital Structure
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What is, Treasury Stock Method?
What is, Treasury Stock Method?
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What are, examples of Potentially Dilutive Securities?
What are, examples of Potentially Dilutive Securities?
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What is, the adjustment when calculating Diluted EPS?
What is, the adjustment when calculating Diluted EPS?
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What is, the condition for Stock Options or Warrants to be Dilutive?
What is, the condition for Stock Options or Warrants to be Dilutive?
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What adjustment is needed in the numerator for Basic EPS when preferred stock is outstanding?
What adjustment is needed in the numerator for Basic EPS when preferred stock is outstanding?
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Stock Dividends and Stock Splits
Stock Dividends and Stock Splits
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What is, the numerator in Basic EPS?
What is, the numerator in Basic EPS?
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What is, a Simple Capital Structure?
What is, a Simple Capital Structure?
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How are Changes in Accounting Estimates Applied?
How are Changes in Accounting Estimates Applied?
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Interest on Convertible Debt
Interest on Convertible Debt
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What is, the key impact when considering dilutive securities?
What is, the key impact when considering dilutive securities?
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Treasury Stock Method
Treasury Stock Method
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Intangible Assets
Intangible Assets
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Exercised-Converted?
Exercised-Converted?
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Are Recognized..
Are Recognized..
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Study Notes
QRK Company Earnings Per Share Calculation
- 1 million common shares were outstanding at the start of 2005
- 200,000 shares were issued on the last day of March
- 500,000 shares were issued on the last day of June
- 800,000 shares were issued on the last day of September
- To compute the 2005 earnings per share for QRK Company, 1.6 million shares should be used
Weighted Average Calculation QRK
- The weighted average number of common shares outstanding takes into account how long shares were outstanding during the year
- Original 1 million shares are weighted for the entire year
- The March issue is weighted for 9 months (200,000 * 9/12 = 150,000)
- The June issue is weighted for 6 months (500,000 * 6/12 = 250,000)
- The September issue is weighted for 3 months (800,000 * 3/12 = 200,000)
- Total weighted shares: 1,000,000 + 150,000 + 250,000 + 200,000 = 1,600,000 or 1.6 million shares
JPK, Inc. Earnings Per Share Calculation
- JPK, Inc. paid $80,000 dividends to preferred shareholders and $40,000 to common shareholders in 2004
- 20,000 common shares were outstanding on January 1, 2004
- 7,000 more shares were issued on June 1, 2004
- A 10% stock dividend was paid on August 1, 2004
- JPK had $150,000 in net income
- The firm's basic earnings per share (EPS) for 2004 is $2.64
Weighted Average Calculation JPK
- 22,000 shares (adjusted for 10% stock dividend) were outstanding for 12 months (22,000 * 12 = 264,000)
- 7,700 shares (adjusted for 10% stock dividend) were outstanding for 7 months (7,700 * 7 = 53,900)
- Total share months = 317,900
- Average shares = 317,900 / 12 = 26,492
- Basic EPS Computation: ($150,000 - $80,000) / 26,492 = 2.64
Basic and Diluted EPS
- A simple capital structure contains no potentially dilutive securities
- Antidilutive securities increase EPS if exercised or converted to common stock
Intangible Assets with Indefinite Lives
- Intangible assets with indefinite lives, like goodwill, are not amortized under IFRS and U.S GAAP
- These assets are tested for impairment at least annually
Artcraft, Inc. Diluted Earnings Per Share
- Net Income: $30,000
- Common Stock: 5,000 shares
- Convertible Preferred Stock: 500 shares, 8% $90 par, each share convertible into 4 common shares
- Convertible Bonds: $60,000 total face value, 6.0% interest, each bond convertible into 110 Artcraft common shares
- Effective Tax Rate: 40%
- Diluted earnings per share (EPS) is $2.36
Diluted Calculation Artcraft
- Basic EPS = ($30,000 - $3,600)/5,000 = $5.28
- Adjusted Earnings Available for Common Shares = (30,000 – 3,600 + 3,600 + 2,160) = $32,160
- Convertible Preferred stock dividend preferred dividends = (0.08)(90)(500) = 3,600
- Convertible debt interest = (60,000)(0.06)(1 – 0.40) = 2,160 To calculate weighted average shares:
- Average common shares = 5,000
- Shares from convertible preferred stock = (500 × 4) = 2,000
- Shares from convertible debt (60 × 110) = 6,600, adding totals potential common= 13,600
- Diluted EPS = 32,160 / 13,600 = $2.36
Caledonia, Inc. Diluted Earnings Per Share
- Net Income: $460,000
- Common Stock: 2,300,000 shares outstanding on January 1
- Average Market Price: $2 per share; Year-End Stock Price: $1.50
- Preferred Stock: 1,000 shares, 8% $1,000 par value
- Warrants: 10,000 warrants, each allows purchase of 100 shares at $1.50 per share
- Diluted earnings per share for 20X6 is $0.15
Diluted Calculation Caledonia
- Caledonian basic earnings per share = (net income - preferred stock dividends) / (weighted average common shares outstanding) = [$460,000 - ($1,000 × 1,000 × 0.08)] / 2,300,000 = $0.17 Using Treasury stock to account for shares
- Exercise Price = $1.50 would generate an inflow 10,000 × 100 × $1.50 = $1,500,000
- Under Treasury Stock shares are purchased with the inflow = $1,500,000 / $2 = 750,000
- The net calculation becomes (1,000,000 – 750,000) = 250,000.
- Diluted EPS = $380,000 / (2,300,000 + 250,000) = $0.15.
Alaska Corporation Earnings Per Share
- At the beginning of 2004, Alaska Corporation had 2 million shares of common stock outstanding and there was no preferred stock
- At the end of August 2004, Alaska issued 600,000 new shares of common stock
- Alaska reported net income equal to $8.8 million
- The firm's earnings per share for 2004 was $4.00
EPS Calculation Alaska
- EPS = earnings available divided by the weighted average number of common shares outstanding
- The weighted average calculation: original 2 million shares outstanding and the 600,000 issued shares
- The 600,000 new shares were outstanding 4 months of the year (4/12 of the additional shares) Thus
- EPS = $8.8 million / [2 million + (4/12)(600,000)] = 8.8/2.2 = $4.00.
Diluted Earnings Per Share
- Interest on convertible debt is added to earnings available to common shareholders after an adjustment for taxes
- Formula = Diluted EPS = [(Net income - Preferred dividends) + convertible preferred dividends + (convertible debt interest)(1 - t)] / [(Weighted average shares) + (Shares from conversion of conv. pfd shares) + (Shares from conversion of conv. debt) + (Shares issuable from stock options)]
Complex Capital Structure
- Firms with potentially dilutive elements
- Supple Moves has warrants and Perfect Collection has convertible debt and options
Maine Company Earnings Per Share
- The company had 100,000 common shares outstanding on January 1, there was a two for one split March 1 and a 10% stock August 1
- 100,000 × 2 × 1.1 = 220,000 shares
Potentially Dilutive Securities
- Examples of potentially dilutive securities include Premium bonds
- Whether a bond is issued or valued at a premium or discount is not relevant to whether the bond is potentially dilutive to earnings per share
- Stock options and warrants are potentially dilutive because they will increase common shares outstanding if they are exercised
- Bonds and preferred stocks are only potentially dilutive if they are able to be converted to common shares
Basic Earnings Per Share Baltimore Corp
- The company net income was $4,200,000
- 750,000 shares of common stock were outstanding on January 1, the average market price per share was $40
- There was 10,000 warrants, which allowed the holder to purchase common shares at $40 per share
- Baltimore's basic diluted earnings per share (Diluted EPS) for 2004 is approximately $5.45 How the result is obtained To calculate
- The basic earnings per share (EPS) was 4,200,000/ 750,000 = $5.60. Then the Treasury Stock method is used Number Exercise = 10,000,000 x 10 = 100,000
- The total cost to exercise $40 and this means the overall cost is Number Exercise = $40 x 100,000 = $40,000,000 Then the total cost/ divided by Market price = 80,000
- To obtain stock outstanding = 100,000–80,000 = 20,000
- diluted earnings per share = 4,200,000 (750,000 + 20,000) = $5.
Weighted Shares Outstanding
- The firm split 2 for 1 on December 31 and had the following numbers of shares outstanding.
- 8,000,000 shares Beginning of year
- 750,000 shares Issued on April 1
- 100,000 shares Issued on October 1
- (1,000,000) Purchased Treasury stock November 1 Α) 20,266,667. = (8,000,000 * 1.2 * 2 *1.0 ) + (750,000 * 1.2 * 2 * 0.75) (100,000 * 2 0.25) -(1,000,000 2 *(2/12))
Callable preferred stock
- A simple capital structure is least likely to include callable preferred stock.
Stock Options Calculation
- Only the stock average average price the stock options with an exercise price of $20 =4000 to use 1 is a method is as an as 1-1/
- 40 or (20,000 – [(20,000 × 20) / 25]) + 100,000 =shares outstanded for the year
Accrual Accounting
- Accrual accounting is based on the matching principle the same period that the expenses are incurred generate those returns for the same period
- Expenses are incurred
Bonds
- the end of in BWT, 5. Diluted BWT is less than diluted securities are dilative
- (1,00/2 to 30/1) must be accounted for in the common shares for BWT
Antidilutive Securities
- Securities that shares or share value are call:
- shares fro conversion are not the calculation or duleted EPS
Convertible Preferred Stock (Diluted shares)
- When one considering com EPS) equation needs just and numerator to calculating dueted earnings. because they result in average number weighted common shares to preferred dividends in the stock price
Gaffe Company dilution earning
- shares are is = < 100,000= X 20 =2 common shares; are dilution due to basic dilution or
- 15% (1,000,000 * + + which is will (2)
IMR diluted shares
- Bonds of = $1,000 *31 *.40. If are net in increase by or average divided be
Common Shares
- (stock (or = average the of year if .If to it, to split. = of the the split dividend stock of *2 stock new .100.2
Feder basic earning stock
- the or from cash price the purchase shares. Is /62.2
Zichron Inc.
Zichron net and divided share a = < as to /" 76.4060 for" "or + dilutive
ROI dilution
of by the to that/s = and dilutes
Jupiter Company
(400/2000 shares for shares
- the (21 to 3 dilutive shares
Trenton Company
- is (5 and will - the stock
Robinson company
stock more are that, and are, and - shares
Savannah Corporation
- EPS for and per is as
Question #50 of 130
A 12 percent $100,000 convertible bond was issued on October 1, 2004
- The effective income tax rate for the year was 40%. What adjustments should be made to calculate diluted earnings per share
- To calculate dilutions= Interest added to $ Shares added to= 4,500
- (The three
Dilutive Securities
The not by is
Protocol income
, . to
An analyst gathered the following about a company:
1,000 par coupon to are
Question #55 of 130
Which costs are least likely to be reported in the current
- If be be
- interest to module in
A shares calculation
4 are the 100 is the (1,7) shares
Question #57 of 130
Selected the in:
- 1, = 5
- 82.2" of 31 4 share the 389 + the share the,100" & *6/
Treasury Stock Method
- assumes that the company share in to
Shares for diluted
0+ in0 0
The end
in are year the dividend all are
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Description
Learn how to calculate Earnings Per Share (EPS) using the weighted average of outstanding shares. Examples include QRK Company and JPK, Inc. Proper weighting accounts for the duration shares are outstanding during the year.
