Maddin

1) Calculate basic: Since no additional common was issued, you dont need to calculate WACSO. So that simplifies it.

Basic: (450,000 - ($3.50 x 50000) ) / (20,000) = $13.75 on per share basis for common

2) Rank the complex securities by most dilutive to least, if they are potentially dilutive

Note : If the avg mkt price is greater than the XP, meaning "its in the money", it will ALWAYS be DILUTIVE. If it's out of the money, simply ignore it. And please ignore div on common shares

These options are in the money!

To calculate incremental shares use this formula:

(avg mkt price-xp)/(avg mkt price) x # of options

(25-10)/25 * 100,000 = 60,000 additional/incremental shares that you include in the denom

P/S : Quick check to see if it's dilutive : P/S div/incremental shares on pref if converted. If its lower than basic, as noted in step 1 then its dilutive

(3.50 x 50000) / 150,000 = $1.16< 13.75 ----->DILUTIVE.. Drop the 150,000 in the denom

So heres dilutive EPS

(450,000 - 175,000+175,000)/ (20,000+150,000+60,000) = $1.96

Basic EPS : $13.75
Dilutive EPS: $1.96


The basic seems high but I believe the calculation with the numbers you provided are correct. What are you showing?