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3 years ago

At December 31, 2021, the financial statements of Hollingsworth Industries included the following:

Business

1 answer:

Degger [83]3 years ago

5 0

Answer:

Basic EPS = $1.34 million

Diluted EPS = $1.23 million

Explanation:

As per the data given in the question,

Share on Jan-1 = 400 million

On Sep 1 Treasury shares = 12 million (36 million × 4 months ÷ 12 months )

No. of shares = 400 - 12 = 388 million

Basic EPS = Net income ÷ number of outstanding shares

= $520 million ÷ 388 million

= $1.34 million

Diluted EPS :

Net income = $520 million

After tax interest saving = $8 (20 million - (40% × 20 million ))

The 20 million is come from

= $520 million ×8%

= 20 million

Adjusted net income = $520 + $8 = $528 million

No. of shares as computed above = 388 million

Bond conversion shares = 40 million

Total share outstanding = 388 + 40 = 428 million

Diluted EPS = $528 million ÷ 428 million

= $1.23

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