Earnings Per Share Flashcards
HOW do you calculate your Weighted Average Shares Outstanding?
BY prorating the number of months outstanding or held by repurchase during the year
E.g. 30,000 stocks issued on 3/1 = 30,000 X 10/12 because there are 10 months still outstanding for the year
WHAT is the basic equation to calculate your Earnings Per Share?
(Net Income – Preferred Stock Dividends) / Weighted Average Common Stock Outstanding
True or False.
WHEN Stock Dividends are declared, they decrease the number of shares outstanding.
FALSE.
WHEN Stock Dividends are declared, they (increase) the number of shares outstanding
e.g. If you had 20,000 Common Shares Outstanding and then issue a Stock Dividend for 5%, your stock dividend amount would be the 20,000 outstanding x the 5% = 1,000
Fill in the Blank.
THE per-share amount must be reported on the __A__ of a public company’s income statement for __B__.
A. Face
B. Income from Continuing Operations
True or False.
All companies are required to provide earnings per share (EPS) information disclosure under GAAP.
FALSE.
Only public entities are required to provide earnings per share (EPS) information under GAAP
WHAT do you do with your interest expense when determining earnings per share?
ADD it back to net income for diluted earnings per share
True or False.
In computing weighted average shares outstanding, stock dividends and stock splits are assumed to have occurred retroactively.
TRUE.
In computing weighted average shares outstanding, stock dividends and stock splits are assumed to have occurred retroactively
Meaning: You would use the beginning of the earliest period presented (e.g. If the earliest period is March you would use March……If it is January then use January)
WHAT happens when the exercise price for stock options are greater than the market price?
THE stock are considered “anti-dilutive”
HOW are
Stock splits treated when calculating your Earnings per Share?
Applied retroactively
E.g. You would use the earliest period of the year presented
True or False.
Dividends on noncumulative preferred shares are only included in the calculation before they are declared.
FALSE.
Dividends on noncumulative preferred shares are ONLY included in the calculation if they are declared
NOTE: Cumulative preferred stock dividends are included whether or not they are declared
HOW does the “if-converted” method work when computing earnings per share?
IT assumes that convertible securities are converted at the beginning of the earliest period reported or, if later, at the time of issuance.
WHEN are Dividends reported for noncumulative preferred shares?
WHEN they are declared
i.e. Dividends are ONLY included in the calculation if they are declared
NOTE: Cumulative preferred stock dividends are included whether or not they are declared but ONLY for the current year – NO prior years are included
True or False.
The spot rate is generally used for forward exchange or futures contracts. The forward rate is generally used for receivables and payables.
FALSE. It is the Other way around.
The spot rate is generally used for RECEIVABLES and PAYABLES
The forward rate is generally used for FORWARD exchange or FUTURES contracts
WHAT happens when a first-time adopter of IFRS presents their opening IFRS Statements of Financial Position?
ALL of the adjustments should be recognized directly in Retained earnings; OR, if appropriate, in another category of equity
WHAT would be an example of an item included in interest expense?
Interest on a Non-interest Bearing Note
WHAT are considered “required” disclosures when preparing financial statements in accordance with IFRS?
(1) Finance costs
(2) Tax expense; and
(3) Income
WHAT is the purpose of reporting Comprehensive Income?
TO summarize all changes in equity from non-owner sources
THE overall purpose is to report overall enterprise performance
True or False.
Foreign currency translation gain or loss is reported as part of Other Comprehensive Income and as part of Net Income (N/I)
FALSE.
Foreign currency translation gain or loss is reported as part of Other Comprehensive Income, but NOT as part of Net Income (N/I).
WHAT is the maximum number of days after an “accelerated filer’s” fiscal year-end that this company may file Form 10-K with the SEC?
75 days
i.e. An “Accelerated Filer” is allowed a maximum of 75 days from the end of its fiscal year to file its Form 10-K
WHAT is one example of a discontinued operation?
THE planned and approved sale of a segment
