We know that the earning per share is the allocated profit of each share. It is calculated by dividing the profit by the outstanding common share.
The outstanding common share is,
Shares
Basic earning per share is,
=(Net inome-Prefered dividend)/Outstanding common shares
Per Share
Basic Eaning per share= 3.08 Per share
Now, we need to calculate the diluted share. That is,
Date Granted | Options granted | Share price | Total |
December 31, 2019 | 11,000 | $14 | 154,000 |
December 31, 2020 | 6,000 | $23 | 138,000 |
December 31, 2021 | 9,500 | $22 | 209,000 |
Total | $501,000 | ||
Divide by average stock of market stock | $32 | ||
Number of Shares granted | 15,656 | ||
Add: from convertible bond (800,000/1000)=800*35 | 28,000 | ||
Diluted shares | 43,656 |
The Diluted earning per share,
=(Net income-Prefered Dividend)/(Outstanding shares+diluted shares)
The diluted Earning per share=$2.90 Per share
Numerator | Denomintor | Earning per share | |
Dow's basic | 2,227,000 | 723,000 | $3.08 |
Dow's diluted | 2,227,000 | 766,656 | $2.90 |
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