Exam 18: Earnings Per Share

On December 31, 2010, Feterik Company had 7,000 shares of common stock issued and outstanding. On April 1, 2011, an additional 1,000 shares of common stock were issued and on July 1, 500 more shares were issued. On October 1, 2011, Feterik issued 10, $1,000 maturity value, 8% convertible bonds. Each bond is convertible into 40 shares of common stock. No bonds were converted into common stock in 2011. Assuming there are no antidilutive securities, what is the number of shares Feterik should use to compute diluted earnings per share for the year ended December 31, 2011?

The EPS computation that is forward-looking and based on assumptions about future transactions is

When computing diluted EPS for a company with a complex capital structure, what is the denominator in the computation?

For companies with a complex capital structure, a convertible security is potentially dilutive if its incremental EPS is

In computing earnings per share, convertible preferred stock may increase the number of shares outstanding if it is

At December 31, 2010, the Roberts Company had 700,000 shares of common stock outstanding. On September 1, 2011, an additional 300,000 shares of common stock were issued. In addition, Roberts had $20,000,000 of 8 percent convertible bonds outstanding at December 31, 2010, which are convertible into 400,000 shares of common stock. No bonds were converted into common stock in 2011. The net income for the year ended December 31, 2011, was $6,000,000. Assuming the income tax rate was 40 percent, what should be the diluted earnings per share for the year ended December 31, 2011?

The income statement of Micro Computers, Inc. showed the following information on December 31, 2011. Compute earnings per share figures for common stock under the assumption that Micro Computer Inc. has

Warrants exercisable at $20 each to obtain 20,000 shares of common stock were outstanding during a period when the average and year-end market price of the common stock was $25. Application of the treasury stock method for the assumed exercise of these warrants in computing diluted earnings per share will increase the weighted-average number of outstanding common shares by

Zacor Incorporated has 2,500,000 shares of common stock outstanding on December 31, 2010. An additional 500,000 shares of common stock were issued April 1, 2011, and 250,000 more on July 1, 2011. On October 1, 2011, Zacor issued 5,000, $1,000 face value, 7 percent convertible bonds. Each bond is convertible into 40 shares of common stock. No bonds were converted into common stock in 2011. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively?

What would be the effect on book value per share and earnings per share if a corporation purchased its own shares in the open market at a price greater than the book value per share?

In determining earnings per share, interest expense, net of applicable income taxes, on convertible debt which is dilutive should be

The JVB Corporation had 200,000 shares of common stock and 10,000 shares of cumulative, $6 preferred stock outstanding during 2011. The preferred stock is convertible at the rate of three shares of common per share of preferred. For 2011, the company had a $60,000 net loss from operations and declared no dividends. JVB should report 2011 diluted loss per share of (rounded to the nearest cent)

Southern Corporation has 20,000 shares of common stock and 5,000 shares of preferred stock outstanding during 2011. Southern reported net income of $60,000 for 2011. Each share of preferred stock is convertible into two shares of common stock. The preferred stock is entitled to a noncumulative annual dividend of $5 per share. After the common stock has been paid a dividend of $1 per share, the preferred stock participates in any additional dividends on a 2:3 per share ratio with the common. For 2011, the common shareholders have been paid $25,000 (or $1.25 per share), and the preferred shareholders have been paid $25,000 (or $5.00 per share). Required: Calculate basic earnings per share under the two-class method for 2011.

On December 31, 2010, Superior, Inc. had 600,000 shares of common stock issued and outstanding. Superior issued a 10 percent stock dividend on July 1, 2011. On October 1, 2011, Superior reacquired 48,000 shares of its common stock and recorded the purchase using the cost method of accounting for treasury stock. What number of shares should be used in computing basic earnings per share for the year ended December 31, 2011?

When computing earnings per share on common stock, dividends on cumulative, nonconvertible preferred stock should be

When computing diluted earnings per share, stock options are

The if-converted method of computing EPS data assumes conversion of convertible securities at the

The following information relates to the capital structure of Metcalf Corp.: During 2011 Metcalf paid $90,000 in dividends on the preferred stock. Metcalf's net income for 2011 was $1,960,000 and the income tax rate was 40 percent. For the year ended December 31, 2011, the diluted earnings per share is

For a company having several different issues of convertible securities and/or stock options and warrants, the FASB requires selection of the combination of securities producing

The following information relates to the Simplex Company for 2011: What is diluted earnings per share?