Net Income |
11,40,000 |
6% Convertible bonds $ 1000 per bond convertible into 30 shares of common stock |
20,10,000 |
No. of Convertible bonds |
2,010 |
No.of Common stock after conversion = |
2010*30 |
No.of Common stock after conversion = |
60,300 |
6% Cummulative preference shares $ 100 each convertible into 3 shares of common stock |
38,20,000 |
No. of Cummulative preference shares |
38,200 |
No.of Common stock after conversion = |
38200*3 |
No.of Common stock after conversion = |
1,14,600 |
Common Stock $ 10 per share |
58,20,000 |
No of Equity shares |
5,82,000 |
Tax rate |
20.00% |
a) |
|
Basic Earnings per share = |
Net income available to equity share holders/No.of equity shares |
1140000/582000 |
|
Basic Earnings per share = |
1.96 |
b) |
|
Diluted Earnings per share = |
Net income available to shares after conversion/No.of shares after conversion |
Net income available to shares after conversion = |
|
Net income before tax |
11,40,000 |
Interest on preference stock |
2,29,200 |
13,69,200 |
|
Net income before tax |
17,11,500 |
Interest on bonds |
2010000*6% |
Interest on bonds |
1,20,600 |
Interest on preference stock |
3820000*6% |
2,29,200 |
|
Netincome before considering interest on bonds |
1711500+120600 |
18,32,100 |
|
Net income available to shares after conversion = |
1832100-20%(1832100)(tax) |
14,65,680 |
|
No.of shares after conversion = |
No.of original shares+No.of shares for conversion of bonds +No.of shares for conversion of preference shares |
582000+60300+114600+90314 |
|
8,47,214 |
|
Diluted Earnings per share = |
1465680/847214 |
1.73 |
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