Answer:
Basic Earnings Per Share = $299,640,000/291,858,904 shares = 1.03 per share
Diluted EPS = $299,640,000/(291,858,904 + 6,000,000) shares = 1.01 per share
Explanation:
300 million shares of common stock - 24 million Treasury Stock = 276 million shares outstanding
CALCULATION OF WEIGHTED AVERAGE NUMBER OF SHARES
Date Shares Weighting (months) Weighted Average
Jan 1 276,000,000 12/12 276,000,000
1st July 13,800,000(5% of 276) 6/12 6,900,000
13th Sept 30,000,000 109/365 days 8,958,904.11
Total 291,858,904
Profit attributable to common shares = Net Income $300,000,000 – (Preference Dividend of 0.09 x 4,000,000) $360,000 = $299,640,000
The formula for basic earnings per share is:
<em>Profit or loss attributable to common equity holders of the parent business ÷
</em>
<em>Weighted average number of common shares outstanding during the period
</em>
Basic Earnings Per Share = $299,640,000/291,858,904 shares= 1.03 per share
Diluted EPS will include $500 million of 8% bonds, convertible into 6 million common shares.
Diluted EPS = $299,640,000/(291,858,904 + 6,000,000)shares = 1.01 per share