Stock, Antidlution, Disclana Diluted EPS, Convertible Bonds, Options, Convertibl

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Stock, Antidlution, Disclana Diluted EPS, Convertible Bonds, Options, Convertible Preferred year. erion Company provided the following share information for the current Event and Date Number of Shares 150,000 240,000 1/1 Beginning balance 6/1 New share issue 8/1 Two-fór-one stock split 10/1 New share issue 390,000 (48,000) 12/1 Treasury stock acquisition vteriom reperted-income-from-eontinuing operations of $r operations,netoftax. The company is subject to a 40% tax rate. Ni- Ihe company granted 120,000 employee options on January 1 allowing employees to acquire 120,000 common shares at $18 per share. The options have an estimated fair value of $10 per share. The average arket price of the company's common shares is $24 per share. Meron has $500,000, 6% convertible ebt outstanding as of the beginning of the year. Each $1,000 par value bond converts into eight shares of the company's common stock. Merion also has $140,000 par value, 4% convertible preferred shares outstanding for the current year. The board of directors declared the annual dividend. The preferred shares can convert into 10,000 shares of common stock. There were no actual exercises or con during the year. versions Required» a. Compute the weighted-average number of common shares outstanding for basic earnings per share. b. Determine whether any securities are antidilutive and compute bas ic and diluted earnings per share. Show all computations.

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1 Change Final Period in month Ratio (period/12) Average number of outstanding shares (Final*Ratio) Jan 1 Beginning 150000 5                            0.42 62500 June 1 New 240000 390000 2                            0.17 65000 Aug 1 Split 2 for 1 390000 780000 2                            0.17 130000 Oct 1 New 390000 1170000 2                            0.17 195000 Dec 1 Treasury Stock -48000 1122000 1                            0.08 93500 12 546000 2 Basic Earning Per Share (Net income-Preferred Dividend)/weighted average no of shares Basic Earning Per Share (570000-5600)/546000 Basic Earning Per Share                                                                                       1.03 Preferred Dividend 140000*4%=5600 3 Additional share for the purpose of Dilluted earning per share 4% convertible preferred stock 10000 Stock Option: Proced from exercise 120000*18 2160000 Value in current share 2160000/24 90000 Additional Share on stock option 120000-90000 30000 6% Convertible Bond 500000/1000*8 4000 Total Additional shares for Dilluted EPS 44000 Dilluted EPS: Net After tax income 570000 Add: back interest on bond 500000*6% 30000 Less: Income Tax 40% 30000*40% 12000 Net income for Dilluted EPS 588000 Diluted EPS 588000/(546000+44000 additional share) Diluted EPS                      1.00

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