Advantage Corp.'s capital structure was as follows:
|
|
December 31, 2000 |
December 31, 1999 |
|
Outstanding shares of stock: |
|
|
|
Common |
110,000 |
110,000 |
|
Convertible Preferred |
10,000 |
10,000 |
|
8% Convertible Bonds |
$1,000,000 |
$1,000,000 |
During 2000, Advantage paid dividends of $3 per share on its preferred stock. The preferred shares are convertible into 20,000 shares of common stock. The 8 percent bonds are convertible into 30,000 shares of common stock. Net income for 2000 was $850,000. Assume the income tax rate is 30 percent.
The basic earnings per share for 2000 is:
The correct answer was A.
Basic EPS =（ Net income - Pref Div） / Wt. Ave. Shares of Common
[850,00 - (3 * 10,000)] / 110,000 = $7.45
The diluted earnings per share for 2000 is:
The correct answer was A.
Formula = Diluted EPS = [(Net income - Preferred dividends) + Convertible preferred dividends + (Convertible debt interest)(1 - t)] / [(Weighted average shares) + (Shares from conversion of conv. pfd shares) + (Shares from conversion of conv. debt) + (Shares issuable from stock options)]
[(850,000 - (3 * 10,000)) + 30,000 + (80,000)(1-.3)] / [(110,000) + (20,000) + (30,000)] = $5.66 | 
发表于 2006-4-27 16:31
| 
