Earning per share

Question 1

What is the Basic EPS formula

Answer 1

EPS = Income available to common share holders / WACSO

Income available to common share holders = (Net income - preferred dividends)

Question 2

How should cumulative preferred stocks be calculated in the determination of income available to Common share holders (IACSH)?

Answer 2

Cumulative preferred stocks should reduce IACSH for the dividend accumulated for that period.

Question 3

How should stock splits be considered in the calculation of Weighted average common shares?

Answer 3

Stock splits should be considered as if these stock were in the whole period.

Question 4

What is the Dilutive EPS Formula

Answer 4

Dilutive EPS = Income available to commo stock holders+ Interest on dilutive securities / WACSO (Assuming all dilutive securities are converted to common stock)