How do I know from what month to count from? this question for example confused got me… Robinson Company had 1 million shares outstanding at the beginning of the year. On April 1, Robinson issued an additional 300,000 shares. On July 1, Robinson issued 200,000 more shares. What is Robinson’s weighted average number of shares outstanding for the calculation of earnings per share?
In this example you would take (1,000,000 x 3/12) + (1,200,000 x 3/12) + (1,500,000 x 6/12). That should get you 1,300,000 for the weighted average shares outstanding.
Hi – I think @chadsandstedt’s response may have a typo, the middle number of shares in the equation should be 1,300,000 not 1,200,000, so the answer would be 1,325,000 weighed shares outstanding vs 1,300,000. But, his formula and methodology are spot-on. I’ve done the same transposition too many times to count.
Good catch on my error! I just wanted to make sure you all were paying attention