EARNINGS PER SHARE Flashcards
Basis equation for calculating Basic Earnings Per Share?
Income available to Common Share holders /
Weighted Average Number of Common Shares Outstanding
OR
NI - Preferred Dividends/
Weighted Ave Share of Common Stock
Two Common Types of Preferred Stock Dividends?
Cumulative and Non-Cumulative
What type of PS is deducted in the year declared?
Non-Cumulative
What type of PS is deducted every year whether it’s declared or not?
Cumulative
What is the equation for calculating Diluted EPS for Convertible Bonds?
Net Income - Preferred Stock Dividends + Interest - Taxes on Interest
/
Weighted Average Number of Common Shares Outstanding + New Shares
What is the equation for calculating Diluted EPS for Convertible PS?
Net Income - Preferred Stock Dividends + Preferred Stock Dividends
/
Weighted Average Number of Common Shares Outstanding + New Shares
IF
EARNINGS PS < MKT PS, then it is?
Dilutive
(REPORTED)
IF
EARNINGS PS > MKT PS, then it is?
Anti-Dilutive
(NOT REPORTED)
How the Denominator increases Convertible Bonds, Convertible PS, and Contracted Stocks?
It increases the number of shares as of beginning of period or as of date of issuance, if issued during the year
How is the Numerator is calculated for Convertible Bonds?
NUMERATOR = + Interest
- Income Tax on Interest
(Note: PS bonds converts to share, interest would no longer be payable and should be added back, AND Income Tax on Interest should be subtracted since payable is added back)
How is the Numerator is calculated for Convertible PS?
NUMERATOR = + Preference Dividend
(Note: PS converts to shares, no dividend would be paid, should added if reduced)
Diluted EPS (with converted shares)
NI + Convertible Bonds $ (net of Tax)
/
CS + Converted PS + Converted Bonds Shares
