Earning Per Share Flashcards
dilutive eps is almost always _____ that basic eps
less
basic EPS Formula
NI-ps div/weighted average cs o/s
Diluted EPS Calculation (as if calculation)
NI-PS div+adj to income for assumed conversion of potential CS/weighted average of cs o/s for period+shares from assumed conversion of potential CS.
BEPS and DEPS are shown on the ______, for_________ (3 items)
face of the financial statements
income for continuing operations
discontinued operations
Net Income
Gaap requires Beps to be reported and Deps to be reported if the firm has ___________
dilutive potencial CS (complex capital structure)
must subtract out all cumulative ps dividends from ni in the numerator regardless if they have _______
been paid or not
Stock dividends and splits are applied __________, when determining the denominator for BEPS
retroactively
Assume the Following for BEPS Shares outstanding January 1 2,000 Issue shares April 1 1,200 Two-for-One stock split May 1 Purchase shares for treasury October 1 400 30% stock dividend November 1 Issue shares December 1 120 Issue shares December 31 200 The WA shares outstanding (denominator of BEPS) =
jan1 2000*12/12= 2000 shares apr1 1200*9/12= 900 may (2k+900)2=5800 oct1 400*3/12= 100 1.3(5800-100)=7410 dec1 120*1/12=10 dec31 200*0/12=0
Beps Denominator 7420 shares O/S
there are 1000 shares of 7% 100 ps O/S. for the current year what amount of ps div is subtracted in calculating BEPS.
Scenario 1.
the ps is CUMULATIVE and there are two years of div in arrears as of the end of the current year, and 4k of dividends were paid.
scenario 2.
the ps is noncumulative and 2000 of dividends were DECLARED in the current year, and 3200 of dividends were paid.
- 1000.07100=7000. if its cumulative always subtract it.
2. 2000 if its declared only what’s declared
to determine bps numerator subtract the following
1 full year of ps div, regardless of amount declared or paid.
declared ps stock div if not cumulative
in 2006 a firm split its stock 2 for 1. ending cs outstanding was 40,000 (20,000 in 05). ni for both years was 80,000. in the 06 IS statement what is reported for BEPS for both years?
80000/40000= $2 per share for both years.
2005 was originally 80000/20000= $4.
you don’t have to go back and change but the comparative financials will be updated.
Question- where is the 4000 from?
EPS Presentation
Income from continuing operations: ($40,000 - $4,000)/13,100 $2.75
Discontinued operations: ($10,000/13,100) ( .76)
Net income ($30,000 - $4,000)/13,100 (rounded) $1.99
the 4000 is ps div. remember the numerator is
ni-ps div 40k-4000
Potential CS Securities are securities that can ______
become common stock in the future
Beps is the _____point for Deps
starting
