Company had 1 million shares of common stock outstanding for the entire year. Company’s beginning stock price was $50, its ending price was $70 and its average price is $60. Company has 100,000 warrants outstanding for the entire year. Each warrant allows holder to buy 1 share of common stock at $50 per share. Question: How many sharres of common stock should the company use in computing its DILUTED earnings per share? Answer: 1016667 Can some1 break the calcualtion down please?
sure. 1,000,000 common outstanding to figure out how many of the warrants to include you do: (avg price-exercise price)/Avg price so (60-50)/60 = .16667 multilply by outstanding warrants = 16,667 and add that to the common outstanding.