EPS Flashcards
Stocks
When the preferred stock dividends are cumulative
if they are declared or paid is not relevant.
Common Stock and Preferred stock are recorded at the
number of shares issued times stated or par value
Retained earnings is not used to
recognize the gain on the reissued treasury stock using the cost method
An investor accounts for an investment in securities using the cost method if
the investor does not have the ability to exercise significant influence over the investee (ownership of less than 20 percent is presumed to be a lack of significant influence).
The term reissued means
sold when calculating for stocks
In a reverse stock split
the number of shares is reduced
For the purposes of calculating weighted average common shares outstanding for both the basic and diluted EPS calculations
stock splits and reverse stock splits are treated as if they happened at the very beginning of the year.
The numerator in a diluted EPS is equal to the
income available to common shareholders plus the after tax interest expense that would not have been incurred if bonds were converted
All potentially dilutive convertible bonds and preferred stock are used i
n computing diluted EPS.
When the exercise price is greater than the market price then
It’s is antidilutive: it’s irrelevant info to calculate diluted earnings per share
What is the maximum number of days after the company’s fiscal year end that the company has to file Form 10-K with the SEC?
75 days
what is the latest date that the 10-Q should be filed with the U.S. SEC?
May 10th: For large accelerated and accelerated filers, the 10-Q is due within 40 days of the period end. From March 31, that means 30 days in April + 10 days in May = May 10.
A dilutive security will produce an earnings per share number
below basic earnings per share
The possible exercise of common stock options would increase
EPS so they are not used because of the antidilution rule.
Diluted earnings per share is the (income available to the common stock shareholder + interest on dilutive securities) divided by
the weighted average number of common shares outstanding assuming all dilutive securities are converted to common stock.
When a stock splits (or reverse splits),
there is no change to equity as a result of the transaction.
Preferred stock is the ownership interest in a corporation that is entitled to a
distribution (e.g., of dividends or assets) before the common stockholders can receive a distribution
Common and preferred stock are recorded
at the number of shares issued times stated or par value.
Stock issued by a company that is subsequently reacquired from shareholders,
so that it is no longer considered “outstanding.”
Additional paid-in capital from treasury stock is credited for gains and debited for losses
when treasury stock is reissued at prices that differ from the original selling price.
Under the cost method of treasury stock accounting,
treasury shares are recorded and carried at their reacquisition cost
In a reverse stock split,
the number of shares outstanding is reduced
Net income or retained earnings will never be
increased through treasury stock transactions.
Treasury stock is a contra-equity account
that reduces reported stockholders’ equity on a firm’s balance sheet.
