Exam 20: Earnings Per Share

A firm has 10,000 common shares outstanding on January 1 of the current year.The following events take place during the current year: May 1 issued 3,000 new common shares June 30 purchased 4,000 shares for the treasury October 31 distributed a 20% stock dividend December 1 reissued the June 30 treasury stock What is the weighted-average number of shares to be used for computing EPS? (Do not round intermediate calculations.Round your final answer to nearest whole number.)

A firm that earned $20,000 (after tax)had the following securities outstanding all year during, which the tax rate was 40%: 20,000 common shares 1,000, 6%, $100 par cumulative nonconvertible preferred shares 2,000, 4%, $50 par noncumulative preferred shares, each share convertible into 5 commo shares 100, 8%, $1,000 convertible bonds, each bond convertible into 10 common shares (bonds were issued at face) No dividends were paid for the year. The diluted earnings per share for the year should be (rounded to the nearest cent):

A firm had 8,000 common shares outstanding at the end of the current period and earned $8,000 that period (net of tax).Also, options to purchase 5,000 shares at $5 each were outstanding all year.For the entire year the firm had $20,000 of 6% debt and $10,000 of 8% debt outstanding.The 8% debt is convertible into 500 common shares.The firm earns interest at 7 percent and has a 50 percent tax rate.The diluted earnings per share for the current year should be (rounded to the nearest cent):

You are given the following information about DWWR Ltd.: 130,000 common shares outstanding on January 1, 2012 12,000 shares sold on March 1, 2012 11,000 shares sold on September 1, 2012 4 for 1 Stock split recorded on October 1, 2012 Net Income for the year $2,340,000 Required: Calculated the basic EPS.

At December 31, 2014, the shareholders' equity of ABC Inc.reported as outstanding: 100 common shares and 30 nonconvertible preferred shares.On July 1, 2015, ABC Inc.issued a 10 percent stock dividend on its common shares and paid a cash dividend of $2.00 per share on its preferred (the full year's requirement).Income for the year ended December 31, 2015 was $1,170.The 2015 EPS, rounded to the nearest cent, for ABC Inc.should be $8.58.

What does the term anti-dilution mean?

Assume basic EPS has been determined.In determining the diluted earnings per share, the annual dividend on convertible noncumulative preferred shares, which are a dilutive convertible security, should be:

In computing EPS for a simple capital structure, net income is reduced by cumulative preferred dividends on nonconvertible preferred shares, whether dividends are declared or not.

Company A has an EPS of $6 and Company B has an EPS of $23.Based on this information, Company B is the better investment.

PPO Inc.discloses the following results and information at the end of the current year: What are PPO's earnings per common share for the current year? (Rounded to the nearest cent.)

If net income is $10,000 and there were 8,000 common shares issued and outstanding the entire year, and $100,000 of noncumulative, nonconvertible 6% $100 par preferred shares outstanding the entire year, what is EPS if no dividends were declared during the year?

The classification of a security as a convertible security should be based on information available at the time:

FGH had 5,000 common shares outstanding on December 31, 2013.An additional 1,000 common shares were issued on April 1, 2014, and 500 more on July 1, 2014.On October 1, 2014, FGH issued 10, $1,000 maturity value, 7 percent convertible bonds.Each bond is convertible into 40 common shares.No bonds were converted into common shares in 2014.What was the number of shares that should be used to compute basic earnings per share and diluted earnings per share, respectively, for the year ended December 31, 2014 (ignore anti-dilution)?

At December 31, 2014, QRS had 500 common shares issued and outstanding, 400 of which had been issued and outstanding throughout the year and 100 of which were issued on October 1, 2014.Net income for the year ended December 31, 2014, was $4,288.What should be QRS's 2014 earnings per common share, rounded to the nearest cent?

EPS figures must be disclosed on the face of the financial statements for discontinued operations.

In computing EPS, convertible preferred shares may increase the number of shares outstanding:

EPS figures must be disclosed under both ASPE and IFRS.

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

A simple capital structure is one in which the shareholders' equity consists only of common shares or includes no potentially dilutive securities.

JUNK BONDS Inc.began operations Jan.1, 2014.The following events related to common shares took place on the indicated dates during 2014. Jan.1 Issued 25,000 common shares Apr)1 Purchased 4,000 treasury shares May 1 Split the common shares 4-for-1 Aug.1 Issued 20,000 common shares Dec.1 Issued a 25% stock dividend Assuming no potentially dilutive securities, what is the weighted average shares for EPS in 2014?(Do not round intermediate calculations.Round your final answer to nearest whole number.)