Flanagan Corporation had 250,000 shares of common stock outstanding during the c
ID: 2580999 • Letter: F
Question
Flanagan Corporation had 250,000 shares of common stock outstanding during the current year. There were also fully vested options for 10,000 shares of common stock were granted with an exercise price of $20. The market price of the common stock averaged $25 for the year. Net income was $4.8 million. What is diluted EPS? (Round your answer to 2 decimal places.)
$19.05.
$19.20.
$18.46.
$20.00
At December 31, 2013 and 2012, Grouper Co. had 66,000 shares of common stock and 6,500 shares of 8%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2013 or 2012. Net income for 2013 was $580,000. For 2013, basic earnings per common share amounted to: (Round your answer to 2 decimal places.)
rev: 04_08_2015_QC_CS-13046
$8.27.
$8.00.
$8.79.
$7.00.
On December 31, 2012, the Guthrie Company had 105,000 shares of common stock issued and outstanding. On July 1, 2013, the company sold 18,000 additional shares for cash. Guthrie's net income for the year ended December 31, 2013, was $590,000. During 2013, Guthrie declared and paid $81,000 in cash dividends on its nonconvertible preferred stock. What is the 2013 basic earnings per share? (Round your answer to 2 decimal places.)
$5.18.
None of these is correct.
$4.46.
$4.85.
Flanagan Corporation had 250,000 shares of common stock outstanding during the current year. There were also fully vested options for 10,000 shares of common stock were granted with an exercise price of $20. The market price of the common stock averaged $25 for the year. Net income was $4.8 million. What is diluted EPS? (Round your answer to 2 decimal places.)
Explanation / Answer
A).Flanagan Corporation:
Diluted EPS= Total Income of the year - Preffered Dividend of the year* / Outstanding Shares
= $4.8 million/ 250,000 Shares
So, Diluted EPS of Flanagan Corporation=$19.20 per share.
*Preffered Dividend of the year is a dividend that is accured and paid on preference shares. Since there are no preference shares in Flanagan Corporation, there will be no preffered dividend and hence will not be deducted from total income.
B). Grouper Co.
Basic earning per common share= Total Earnings of the year* / Outstanding Common Stock Shares
=$580,000/ 66,000 Shares
Basic earning per common share of Grouper Co.=$8.00 per share
*Total Earnings of the year=Net Income-Preffered dividend paid during the year
=$580,000 (As preffered dividend is not being paid during the year)
C). Guthrie Company:
Basic Earning Per Share=Net income available to shareholders* / Weighted average number of shares outstanding
=$509,000 / 87,000 Shares**
Basic Earning per share =$5.85 per share.
*Net income available to share holders= Income available for the year - Dividend paid
=$590,000 - $81,000
=$509,000
**Calculation of Weighted average number of shares outstanding= Total Shares - Shares sold during the year
=105,000 - 18,000
=87,000 Shares
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