Exam 15: Earnings Per Share

Use the following information to calculate the "net income available to ordinary shareholders": Net income 1,000,000 Dividends on cumulative preferred shares 40,000 Dividends on non-cumulative preferred shares 100,000 Dividends declared in 2013: - Common shares 50,000 - Cumulative preferred shares 80,000 - Non-cumulative preferred shares 100,000 Dividends paid in 2013: - Common shares 30,000 - Cumulative preferred shares 50,000 - Non-cumulative preferred shares 0

Calculate the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 5\% and coupon rate of 4\% \ 2,000,000 Issue date January 1,2013 Maturity date December 31,2020 Conversion rate for each \ 1,000 bond 40 ordinary shares Income tax rate 25\%

Which statement is correct about potential ordinary shares (POS)?

Which statement is correct?

Which statement is correct about basic EPS?

The net income for Harley's Equestrian Show Jumping Co.for the year ended December 31,2015 was $1,400,000.Harley had 30,000 ordinary shares outstanding at the beginning of the year.Harley declared and distributed a 3-for-1 stock split on May 1,2015 and issued (sold)40,000 ordinary shares on November I,2015.Select details of Harley's liabilities and equities follow: • Bonds-$1,400,000,11%,10-year,semi-annual bonds issued on July 1,2015.At the option of the holder,each $1,000 bond can be converted into 20 ordinary shares at any time before expiry. • Bonds B-$1,500,000,9%,semi-annual bonds maturing September 30,2019.The owners of the bonds elect to convert them into 25,500 ordinary shares on December 1,2015. • 50,000 cumulative preferred shares that are each entitled to dividends of $20.00 per annum.Dividends are not declared in 2015. • Harley's corporate tax rate was 30%.The recorded conversion factor for the convertible bonds has already been adjusted for the stock split. Requirements: Assuming that the effective rate of interest on the bonds equals the coupon rate: a.Calculate Harley's basic earnings per share for 2015. b.Prepare a schedule that sets out the income effect,share effect,and incremental BPS for each security that is convertible into ordinary shares.Rank the potential ordinary shares by their dilutiveness. c.Calculate Harley's diluted earnings per share for 2015.

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)? Ordinary shares, January 1,2013 120,000 Shares issued, March 1, 2013 60,000 Shares issued, Nov 1, 2013 90,000

Which statement is correct?

Calculate the income effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 6\% and Ioupon rate of 6\% \ 2,000,000 Issue date January 1,2015 Maturity date December 31,2018 Conversion rate for each \ 1,000 bond 20 ordinary shares Income tax rate 25\%

Accu Tech Renovations Corp.(ATRC)was incorporated on January I,2014.At that time it issued 100,000 ordinary shares; 80,000,$20,3% preferred shares "A"; and 40,000,$20,6% preferred shares "B." Net income for the year ended December 31,2014 was $1,800,000.ATRC declares and pays total of $238,000 in dividends.The series A preferred shares arc cumulative and the series B preferred shares are non-cumulative.Series A must be fully paid their current entitlement before any monies are paid to the Series B shareholders. Requirement: Compute basic BPS.

Which statement is correct about earnings per share (EPS)?

Which statement is correct?

Which statement is correct about basic EPS?

Two different companies have many similarities,including the following: • They all earned net income of $3,500,000 for the year ended December 31,2017; • They are all subject to a 35% tax rate; • The average price of the companies' ordinary shares during the year was $26; and • Each company had 1,400,000 ordinary shares outstanding during the year. They do have slightly different complex capital structures,however.Specifically: • Company ACE had stock options outstanding the entire year that allowed employees to buy 50,000 ordinary shares for $20 each until December 31,2019. • Company DUECE had $600,000 in 5% bonds maturing on December 31,2019 that were outstanding the entire year.Each $1,000 bond is convertible into 5 ordinary shares any time before expiry. Requirements: a.Calculate the basic EPS of the four companies. b.Prepare a schedule that sets out the income effect,share effect,and incremental EPS for each company's security that is convertible into ordinary shares. c.Consider each company's POS and determine whether it is dilutive or anti-dilutive.For company D assume that the effective rate of interest on the bonds equals the coupon rate and ignore the equity component of the conversion option.

Which statement is correct about the "if-converted" method for EPS?

XYZ Company has 500,000 common shares outstanding and 50,000,$4,cumulative,participating preferred shares outstanding.Preferred shareholders receive dividends once the common shareholders have received $2 per share.No dividends were declared last year; however,$2,000,000 in dividends were declared this year.How much of the dividend amount is allocated to preferred shareholders?

Calculate the income effect on the incremental EPS for the following instrument: Convertible bonds outstanding, effective yield of 7\% and coupon rate of 6\% \ 2,000,000 Issue date January 1, 2019 Maturity date December 31, 2018 Conversion rate for each \ 1,000 bond 20 ordinary share Income tax rate 25\%

Which statement is correct?

Which statement is correct about diluted EPS?

Which statement is correct?