Jan 1st co has 22500 10$ par value common O/S. July 1st, company repurchased 5,000 shares. Company has 11,000 10% $100 par value preferred shares. Companys NI is $210,000. Diluted EPS is? 5 7.5 10 10.5
(210,000-(0.1*100*11,000))/(22,500-5,00) = 5.71 ?
I may be incorrect here but if the preference shares are not convertible… weighted average number of shares outstanding = 22500 - 0.5*5000 = $20000 adjusted income available for common shares = 210000 - 11000*.1*100 = $100,000 therefore EPS = 100000/20000 = 5
5 is right. I forgot to account for the fact that the shares were repurchased mid-way through the year
5 is basic EPS. There’s no dilutive preferred/bond. So what is dilutive EPS?
Equal to the basic. Even is the company would have had dilutive securities, if there are no dilutive effects and the diluted EPS would be greater than or equal to the basic EPS, the dilution would not be reported (that is, basic EPS=diluted EPS)
5 is correct. this one really threw me off.