Homework Answers
For Year 2021.
1. Basic Earnings per share = $799,800 / 430,000 shares = $1.86 per share.
2. Diluted Earnings per share (assuming bonds are converted to shares)
Profit after tax = $799,800 + (5,000 * $1,000 * 10% * 70%) = $799,800 + $350,000 = $1,149,800.
No.of shares outstanding = 430,000 + (5,000 * 20) = 530,000 shares.
Diluted EPS = $1,149,800 / 530,000 shares = $2.17 per share.
Earnings per share increases as a result of converstion, The bonds are anti-dilutive and the Proper EPS should be disclosed as $1.86 per share.
Answer EPS = $1.86 per share.
Note : Please comment down for any further clarifications.
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