Earnings per share Flashcards
all public entities are required to present EPS on the face of the ______ ________
income statement
A simple capital structure has only ______ _______ outstanding and presents only ______ EPS
common stock; basic
Entities that present basic and diluted EPS are said to have _________ capital structures
complex
If a discontinued operation or an extraordinary item is reported, ______ and _______ per share amounts must be presented
basic; diluted
Basic EPS =
NI - preferred dividends / weighted average number of common shares outstanding
The calculation of WACSO includes the beginning shares ______ + shares _____ during the period - shares _______ + stock dividends and stock splits - reverse stock splits
outstanding; sold; reacquired
Stock dividends and stock splits must be treated as they they occurred at the _________ of the period
beginning
An entity has a ______ capital structure when it has securities that can potentially be converted to common stock and would therefore dilute EPS
complex
Diluted EPS =
NI - preferred dividends + interest on dilutive securities / WACSO, assuming all dilutive securities are converted to common stock
The _______ ______ method assumes that the proceeds from the exercise of stock options, warrants, and their equivalents will be used by the company to repurchase treasury shares at the prevailing market price, resulting in an incremental increase in shares outstanding
treasury stock
Options and similar instruments are only dilutive when the average ________ price of the underlying CS exceeds the _______ price of the options or warrants
market; exercise
Treasury stock method to find additional shares outstanding =
of shares - (# of shares x exercise price)/avg market price
Do not include the assumed conversion if it is __________
antidilutive
If it is presumed that a contract will be settled in common stock, it should be ______ in diluted EPS
included
Contingent shares (that are dilutive) are also included in the calculation of _____ EPS if all conditions for issuance are met.
basic
Contingent shares (that are dilutive) are _____ in the calculation of basic earnings per share (EPS) if (and as of the date) all conditions for issuance are met. Stock options are ______ from the calculation of basic EPS.
included; excluded
In computing the weighted-average number of shares outstanding for earnings per share (EPS) determination, a ______ _______ to the same class of shareholders must be retroactively recognized and treated as if it had occurred at the beginning of the year.
stock dividend
Shares issuable upon the exercise of a stock option are ___ ________ contingent shares as the option holder is required to pay the strike price to exercise the options.
not considered
When computing basic earnings per share, convertible securities are ______ for purposes of computing the weighted average of common shares outstanding.
ignored
In determining earnings per share, interest expense, net of applicable income taxes, on convertible debt that is dilutive should be ______ for diluted EPS but ______ for basic EPS
added back; ignored
