Please answer the question according to the above format. Thank you!
Blossom Horizon Corp has the outstanding items of the financial year September 30,2021 are as follows: | |||
720,000 Common shares | |||
330,000 $3 cumulative, no -par value preferred shares | |||
Options to purchase 90,000 common shares at $13 per share. However, the options were not exercised. | |||
9% bond with a face value of $1,800,000, convertible to 47,000 common shares | |||
In all previous fiscal years Blossom has given preference dividend to the preference shareholders | |||
Tax rate is 15% | |||
Dividend on preference shares = | Net income after tax X rate of Preference shares | ||
= | 6900300 X 3% | ||
= | 207009 | ||
Basic Earning per share = Net income after tax after Preference dividends/ Total Common shares | |||
= 6693291/767000 | |||
= $ 8.73 | |||
Particulars | Amount $ | ||
Blossom Horizon Corp net income for fiscal year 2021 | 8118000 | ||
(-) Tax rate @15% on net profits | 1217700 | ||
Net income after tax | 6900300 | ||
(-)Dividend on preference shares (3% on 6900300) | 207009 | ||
Net income after tax after Preference dividends | 6693291 | ||
Basic Earning per share | 8.73 | ||
Calculation of the after tax interest paid on the 9% bonds | |||
Particulars | Amount $ | ||
Blossom Horizon Corp net income for fiscal year 2021 | 8118000 | ||
Interest @9% | 730620 | ||
Tax rate @15% on 730620 | 109593 | ||
After tax interest paid on 9% bonds | 621027 | ||
Calculation of total common shares | |||
Particulars | shares | ||
Common shares | 720000 | ||
9% bond with a face value of $1,800,000, convertible to 47,000 common shares | 47000 | ||
Total Common shares | 767000 | ||
Incremental per share effect for 9 % bonds | |||
Potentially diluted security | Incremental Numerator Effect | Incremental Denomainator effect | Earning Per share |
9% bonds | 7521327 | 767000 | 9.806 |
Incremental Numerator Effect | Profit of the company+ after tax interest on 9% bonds | ||
6900300 + 621027 | |||
7521327 | |||
Incremental Denominator effect | Number of common shares outstanding during the fiscal period+ All dilutive potential shares | ||
767000 | |||
Calculations of Proceeds from assumed exercise of options | Amount $ | ||
Average Market price is $20 per share | 1800000 | ||
Purchase of 90,000 common shares @ $13 per share | 1170000 | ||
Net proceeds | 630000 | ||
Calculation of Incremental shares outstanding upon the exercise of option | |||
Common shares outstanding during the period | 720000 | ||
Exercise of option | 90000 | ||
Conversion of bond into shares | 47000 | ||
Total common shares | 857000 | ||
Rank the potential diluted securities from most diluted to least diluted | |||
9% bonds | Anti- diluted | ||
Calculation of Blossom's diluted Earning per share of the year | Numerator | Denominator | EPS |
7228791 | 857000 | 8.43 |
Please answer the question according to the above format. Thank you! Question 2 --/8 View Policies...
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