Help with calculating weighted average number of shares outstanding..

  • The following information is extracted from the financial reports of ABC Mines Ltd: 100 million shares of common stock were outstanding at the beginning of 2010. 2 million shares were issued on the last day of June. 5 million shares were issued on the last day of August. 8 million shares were issued on the last day of November. What is the number of shares that should be used to compute 2010 earnings per share for ABC Mines?

A) 115 million

B) 103.32 million

C) 100 million Ok so I thought I was doing this problem all correctly… Shares outstanding January 1st = 100,000,000 + 2 million issued last day of june = 2,000,000 x (6/12) + 5 million issued last day of august = 5,000,000 x (8/12) + 8 million issued last day of November = 8,000,000 x (11/12) Doing it this way, I do not get any of the answers listed. Any help?

The shares issued on the last day of August exist for only four months (September, October, November, and December), not eight months.

The shares issued on the last day of November exist for only one month (December), not eleven months.

Note that the shares issued on the last day of June do, in fact, exist for six months as you calculated, but I believe that you got the correct number by accident.

Hmm, it seems I was calculating it based off the months from the beginning of the year, not the end of the year. Thank you!

You’re quite welcome.