Question

if possible can you also put the formulas to plug in the excel file. thanks in advance!

Basic Earnings Per Share = Diluted Earning Per Share = 13 Example 2: Convertible Preferred Staocks 14 Net Income: 1200000 15 Preferred Stocks: 4000000 16 Dividend Rate: 0.06 17 Tax Rate: 0.4 AVG number of Share 18 Outstanding: 600000 Additional Sahres 19 after Conversion 200000 40000 1000 Basic Earnings Per Share = 22 Example 3: Options 23 Net Income 24 Number of Options: 25 Conversion rate Per Option: 26 Tax Rate: 27 Exercise Price 28 Average Price 29 Number of Shares Outstanding: Diluted Earning Per Share = 0.4 10000 30

Answer 1

Example 2: Convertible Preference Shares:

Calculation od Earnings Per Share = (Net Income - Preferred Dividends)/Weighted Average of common shares outstandiing during the period

EPS= 1200000-(4000000*0.06)/600000

= 1.6/-

Calculation of Diluted EPS= (Net Income - Dividends on Preferred Stock)/ (Average outstanding shares+Diluted shares)

Diluted EPS= 1200000-(4000000*0.06)/ (600000+200000)

DEPS=1.2/-

Example 3: Options:

Calculation of EPS= (Net Income - Preferred Dividends)/Weighted Average of common shares outstandiing during the period

EPS= (40000 - 0)/ 10000

=4/-

Calculation of Diluted EPS= (Net Income - Dividends on Preferred Stock)/ (Average outstanding shares+Diluted shares)

Diluted EPS= (40000 - 0)/ 10000+ 1000)

DEPS= 3.63/-