Exam 20: Earnings Per Share

What does diluted EPS take into account?

The basic EPS can be compared with basic EPS numbers from the past years to see whether the company is earning more or less for its common shareholders.

A company reported the following capital structure on December 31, 2002, and the related results of operations for the year then ended. A 2 for 1 stock split was issued on December 31, 2002.The tax rate for the year is 40%. Show the earnings per share of the company as it would appear on the income statement of the company for 2002.Show all computations.

ABC has 20,000 common shares outstanding throughout the year.It also had 20,000, 6 percent preferred shares, par $20, (cumulative and nonconvertible)outstanding throughout the year.Net income was $300,000.The earnings per share amount would be: (Rounded to the nearest cent.)

When different classes of common shares exist, a separate calculation of EPS is required for each class of common shares when dividend privileges differ by share class.

Convertible noncumulative preferred stock for which the current year's dividend has not been declared does not affect the EPS figures if it:

At December 31, 2013, the shareholders' equity of LMN reported as outstanding: 100 common shares and 30 nonconvertible preferred shares.On July 1, 2014, LMN 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, 2014 was $1,170.The 2014 EPS, rounded to the nearest cent, for LMN should be:

Dilutive convertible securities must be used in the computation of:

You are given the following information about DWWR Ltd.: 130,000 common shares outstanding on January 1, 2012 $100,000 8% preferred shares, cumulative, nonconvertible dividends paid at the end of the year 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: Calculate the basic EPS.

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 cumulative preferred shares, each share convertible into 5 common shares 100, 8%, $1,000 convertible bonds, each convertible into 10 common shares (bonds were issued at face) What is basic EPS? (Rounded to the nearest cent)

You are given the following information about KER Ltd.: 30,000 common shares outstanding on January 1, 2012 5,000 preferred shares, no-par, $1.30 (cumulative, nonconvertible)outstanding on January 1 2,000 shares sold on March 1, 2012 1,000 shares sold on September 1, 2012 2 for 1 Stock split recorded on October 1, 2012 Net Income for the year $340,000 Required: Calculated the basic EPS.

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

Given the following sequence of events, determine the weighted average number of share for earnings per share purposes: January 1 100 common shares issued and outstanding April 1 issued 50 previously unissued shares May 1 split the stock 2-for-1 June 30 purchased 100 shares for the treasury July 30 distributed a 20% stock dividend December 31 Split the stock 3-for-1