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Answer 1 Basic Earning per shareBasic Earning per share = BEBS.pdf

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Answer 1 : Basic Earning per share Basic Earning per share = BE/BS = 25700/ 10600 = 2.42 Working Notes BE = Income available for common stock holders Net Income 50000 Less: Intt on Bonds (100000*6.5%) 6500 ------------- EBT 43500 Less Tax paid @ 30% 13050 ---------------- Income after tax 30450 Less Dividend paid to Prefered stock holder 4750 ------------------ Amount Available common 25700 Stock holder ----------- BS = Weighted avaerage no. of common stock = Share at begining 9600 May, 1 Share issued 1200 weight 1200 *8/12 800 SeP, 30 Share issued 800 Weight 800*3/12 200 ------------ Total no. of shares 10600 ----------------- Answer - 2 Dialute Earning Per share = Net Income/Avg shares+other convertible instuments = (50000-1950)/15100 = 48050/15100 = 3.18 Working notes Avg Share = 10600 Prefered stock (1000*2) = 2000 Bonds (100000/1000*25) = 2500 -------------------------- Total shares = 15100 --------------------------- Incremental EPS of Preferred Stock = 4750/2000 = 4750/2000 = 2.38 Incremental EPS of Bonds = interest/ incremental no. of shares due to conversion of bonds = 6500-1950/2500 = 4550/2500 = 1.82 Answer 3 Incremental Earning per share Bonds = $ 1.82 Preferred = $ 2.38 Solution Answer 1 : Basic Earning per share Basic Earning per share = BE/BS = 25700/ 10600 = 2.42 Working Notes BE = Income available for common stock holders Net Income 50000 Less: Intt on Bonds (100000*6.5%) 6500 ------------- EBT 43500 Less Tax paid @ 30% 13050 ---------------- Income after tax 30450 Less Dividend paid to Prefered stock holder 4750 ------------------ Amount Available common 25700 Stock holder ----------- BS = Weighted avaerage no. of common stock = Share at begining 9600 May, 1 Share issued 1200 weight 1200 *8/12 800 SeP, 30 Share issued 800 Weight 800*3/12 200 ------------ Total no. of shares 10600 ----------------- Answer - 2 Dialute Earning Per share = Net Income/Avg shares+other convertible instuments = (50000-1950)/15100 = 48050/15100 = 3.18 Working notes Avg Share = 10600 Prefered stock (1000*2) = 2000 Bonds (100000/1000*25) = 2500 -------------------------- Total shares = 15100 --------------------------- Incremental EPS of Preferred Stock = 4750/2000 = 4750/2000 = 2.38 Incremental EPS of Bonds = interest/ incremental no. of shares due to conversion of bonds = 6500-1950/2500 = 4550/2500 = 1.82 Answer 3 Incremental Earning per share Bonds = $ 1.82 Preferred = $ 2.38.

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Answer 1 : Basic Earning per share Basic Earning per share = BE/BS = 25700/ 10600 = 2.42 Working Notes BE = Income available for common stock holders Net Income 50000 Less: Intt on Bonds (100000*6.5%) 6500 ------------- EBT 43500 Less Tax paid @ 30% 13050 ---------------- Income after tax 30450 Less Dividend paid to Prefered stock holder 4750 ------------------ Amount Available common 25700 Stock holder ----------- BS = Weighted avaerage no. of common stock = Share at begining 9600 May, 1 Share issued 1200 weight 1200 *8/12 800 SeP, 30 Share issued 800 Weight 800*3/12 200 ------------ Total no. of shares 10600 ----------------- Answer - 2 Dialute Earning Per share = Net Income/Avg shares+other convertible instuments = (50000-1950)/15100 = 48050/15100 = 3.18 Working notes Avg Share = 10600 Prefered stock (1000*2) = 2000 Bonds (100000/1000*25) = 2500
-------------------------- Total shares = 15100 --------------------------- Incremental EPS of Preferred Stock = 4750/2000 = 4750/2000 = 2.38 Incremental EPS of Bonds = interest/ incremental no. of shares due to conversion of bonds = 6500-1950/2500 = 4550/2500 = 1.82 Answer 3 Incremental Earning per share Bonds = $ 1.82 Preferred = $ 2.38 Solution Answer 1 : Basic Earning per share Basic Earning per share = BE/BS = 25700/ 10600 = 2.42 Working Notes BE = Income available for common stock holders Net Income 50000 Less: Intt on Bonds (100000*6.5%) 6500 ------------- EBT 43500 Less Tax paid @ 30% 13050 ---------------- Income after tax 30450 Less Dividend paid to Prefered stock holder 4750 ------------------ Amount Available common 25700 Stock holder ----------- BS = Weighted avaerage no. of common stock
= Share at begining 9600 May, 1 Share issued 1200 weight 1200 *8/12 800 SeP, 30 Share issued 800 Weight 800*3/12 200 ------------ Total no. of shares 10600 ----------------- Answer - 2 Dialute Earning Per share = Net Income/Avg shares+other convertible instuments = (50000-1950)/15100 = 48050/15100 = 3.18 Working notes Avg Share = 10600 Prefered stock (1000*2) = 2000 Bonds (100000/1000*25) = 2500 -------------------------- Total shares = 15100 --------------------------- Incremental EPS of Preferred Stock = 4750/2000 = 4750/2000 = 2.38 Incremental EPS of Bonds = interest/ incremental no. of shares due to conversion of bonds = 6500-1950/2500 = 4550/2500 = 1.82 Answer 3 Incremental Earning per share Bonds = $ 1.82 Preferred = $ 2.38

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Answer 1 Basic Earning per shareBasic Earning per share = BEBS.pdf

  • 1. Answer 1 : Basic Earning per share Basic Earning per share = BE/BS = 25700/ 10600 = 2.42 Working Notes BE = Income available for common stock holders Net Income 50000 Less: Intt on Bonds (100000*6.5%) 6500 ------------- EBT 43500 Less Tax paid @ 30% 13050 ---------------- Income after tax 30450 Less Dividend paid to Prefered stock holder 4750 ------------------ Amount Available common 25700 Stock holder ----------- BS = Weighted avaerage no. of common stock = Share at begining 9600 May, 1 Share issued 1200 weight 1200 *8/12 800 SeP, 30 Share issued 800 Weight 800*3/12 200 ------------ Total no. of shares 10600 ----------------- Answer - 2 Dialute Earning Per share = Net Income/Avg shares+other convertible instuments = (50000-1950)/15100 = 48050/15100 = 3.18 Working notes Avg Share = 10600 Prefered stock (1000*2) = 2000 Bonds (100000/1000*25) = 2500
  • 2. -------------------------- Total shares = 15100 --------------------------- Incremental EPS of Preferred Stock = 4750/2000 = 4750/2000 = 2.38 Incremental EPS of Bonds = interest/ incremental no. of shares due to conversion of bonds = 6500-1950/2500 = 4550/2500 = 1.82 Answer 3 Incremental Earning per share Bonds = $ 1.82 Preferred = $ 2.38 Solution Answer 1 : Basic Earning per share Basic Earning per share = BE/BS = 25700/ 10600 = 2.42 Working Notes BE = Income available for common stock holders Net Income 50000 Less: Intt on Bonds (100000*6.5%) 6500 ------------- EBT 43500 Less Tax paid @ 30% 13050 ---------------- Income after tax 30450 Less Dividend paid to Prefered stock holder 4750 ------------------ Amount Available common 25700 Stock holder ----------- BS = Weighted avaerage no. of common stock
  • 3. = Share at begining 9600 May, 1 Share issued 1200 weight 1200 *8/12 800 SeP, 30 Share issued 800 Weight 800*3/12 200 ------------ Total no. of shares 10600 ----------------- Answer - 2 Dialute Earning Per share = Net Income/Avg shares+other convertible instuments = (50000-1950)/15100 = 48050/15100 = 3.18 Working notes Avg Share = 10600 Prefered stock (1000*2) = 2000 Bonds (100000/1000*25) = 2500 -------------------------- Total shares = 15100 --------------------------- Incremental EPS of Preferred Stock = 4750/2000 = 4750/2000 = 2.38 Incremental EPS of Bonds = interest/ incremental no. of shares due to conversion of bonds = 6500-1950/2500 = 4550/2500 = 1.82 Answer 3 Incremental Earning per share Bonds = $ 1.82 Preferred = $ 2.38