Quick Diluted EPS Question into, 2004, common, income, share

tikfed

December 31, 2004
December 31, 2003
Outstanding shares of stock:
Common
200,000
200,000
Convertible preferred
5,000
5,000
6% Convertible Bonds
$500,000
$500,000
During 2004, Ajax paid dividends of $2.00 per share on its preferred stock.
The preferred shares are convertible into 10,000 shares of common stock.
The 6% bonds are convertible into 15,000 shares of common stock.
Net income for 2004 was $400,000.
Assume that income tax rate is 40%.
Basic EPS: [400,000 ? 10,000] / 200,000 shares = $1.95 per share
Diluted EPS: [400,000 + (30,000

dmar

thats correct Devildog,
but aint we supposed to add the Preferred Div of $10,000 also to the NI in the numerator while calculation diluted EPS calculation?

bchadwick

LOL. Got it. Thanks!
Honestly this was Question #100 out of my 100 Question QBank test! Thanks for your help!