Question

Flint corporation reported net income of 391320 in 2017 and had 206000 shares of common stock outstanding throughout the year. Also oustanding all year were 570000 options to purchase common stock at 12 per share. The average market price of the stock druing the year was 15. Compute diluted earnings per share.

Answer 1

Answer:

$1.23

Explanation:

The computation of the diluted earnings per share is shown below:

Diluted earning per share = Net income ÷ weighted number of common stock outstanding

where,

Net income is $391,320          

Weighted average number of outstanding shares equal to

= 206,000 shares  + 114,000 shares

= 320,000 shares

The 114,000 shares is

= 570,000 ÷ $15 × $12

= 456,000

Now 570,000 - 456,000 = 114,000 shares

So, the diluted earning per share

= $391,230 ÷ 320,000 shares

= $1.23