Weighted average number of shares outstanding

I am trying to solve this example 14 in the CFA study material Understanding Income statement. -Institute, CFA. 2018 CFA Program Level I Volume 3 Financial Reporting and Analysis. Shares outstanding on 1 January 2009-1,000,000 Shares issued on 1 April 2009-200,000 Shares repurchased (treasury shares) on 1 October 2009-(100,000) On 1 December 2009, a previously declared 2 for 1 stock split took effect. Each shareholder of record receives two shares in exchange for each current share that he or she owns. Answer given in the CFA study materials is 2,250,000 My answer is 2,125,000.00 (as below) 2,000,000 X12/12= 2,000,000.00 200,000 X 9/12= 150,000.00 (100,000) 3/12 = (25,000.00) Need help to understand how CFA is arriving at the 2,250,000 Weighted average number of shares outstanding

Hi Kaps14,

Here is how I do it.

2 for 1 stock split is applied retrospectively hence we double the shares:

2,000,000 shares outstanding for 3 months = 2,000,000 * (3/12) = 500, 000

2,400,000 shares outstanding for 6 months = 2,400,000 * (6/12) = 1,200,000

Shares repurchased is 200,000, so this brings down the number of shares to 2,200,000 for the last 3 months of the year = 2,200,000 * (3/12) = 550,000.

Weighted average number of shares outstanding = 500,000 + 1,200,000 + 550,000 = 2,250,000

Hope this helps

Hi Cfageist,

Thanks for the response. I have understood the concept, as this:

Due to the 2 to 1 stock split everything ie all shares doubles and the answer could also be solved as this:

2,000,000 X12/12= 2,000,000 400,000 X 9/12= 300,000 (200,000) 3/12= (50,000) 2,250,000

Thanks

Kaps14