F1-M2 EPS and Public Company Reporting Topics Flashcards
Form 10-K
The annual report that must be filed by US registered companies (issuers). Provides details to current and prospective investors about the business of a company and the relevant risk factors it faces, its financial and operating results for the year, and the perspective of its executive leadership.
The filing deadlines relative to fiscal year-end are:
* 60 days for large accelerated filers;
* 75 days for accelerated filers; and
* 90 days for all other registrants
Form 10-Q
The quarterly report that must be filed by US registered companies for each of the first 3 quarters of every fiscal year. The report provides an overview of business operations, financial statements, nonfinancial information (e.g. legal items, risk factors, recent equity sales), and relevant disclosures.
The filing deadlines relative to fiscal quarter-end are as follows:
* 40 days for large accelerated and accelerated filers; and
* 45 days for all other registrants
Note: A company that is not subject to seasonal fluctuations that could have a significant impact on its financial condition, is required to present balance sheets on Form 10-Q that include the end of the preceding fiscal year.
Form 8-K
A form required to be filed by all companies registered with the SEC. The form reports on major corporate events, include corporate asset acquisitions/disposals, accountant changes, financial statement changes, management changes, changes in securities, etc.
Companies generally have four business days to file the form for any event that triggers a filing requirement.
What is an “Accelerated Filer”?
An accelerated filer is an issuer:
* with a public float of greater than or equal to $75 million;
* subject to the Security Exchange Act’s reporting requirements for greater than or equal to 12 months;
* that previously filed at least one report;
* which is not eligible to file quarterly and annual reports on Forms 10-QSB and 10-KSB.
Smaller reporting companies, which are entities with annual revenues of less than $100M, are excluded from the definition of large accelerated filers or accelerated filers.
How are stock dividends and stock splits treated for purposes of EPS calculations?
As if they were issued at the beginning of the fiscal year.
How is Earnings per Share (EPS) calculated?
Net income - preferred stock dividend “requirement” = income available to common shares
Income available to common shares / average common shares outstanding = Basic earnings per common share
Note: When preferred stock dividends are cumulative, whether they are declared or paid is not relevant. Preferred dividends accumulated during the period on cumulative preferred stock or preferred dividends declared during the period on noncumulative preferred stock must be subtracted from net income to calculate the income available to common shareholders.
Also, when a company purchases treasury stock, the number of shares outstanding decreases.
Also, Contingent shares (that are dilutive) are included in the calculation of basic earnings per share (EPS) if (and as of the date) all conditions for issuance are met.
Note that prior year EPS data needs to be adjusted for stock splits occurring in subsequent years.
How is Diluted EPS calculated?
(Income available to the common stock shareholder + Interest on dilutive securities - tax deduction on interest on dilutive securities & the discount amortization) / Weighted average number of common shares (assuming all dilutive securities are converted to common stock)
Notes:
- Options and similar instruments are only dilutive when affect of the exercised option or warrant causes the average market price of the underlying common stock to decrease. When the exercise would cause the stock price to increase, these options or warrants would be “out of the money” or antidilutive.
- Preferred dividends are not subtracted when computing the adjusted net income because we are making the assumption that the preferred shares were converted to common shares at the beginning of the period and, thus, that no preferred dividends were paid.
How do you determine if security is dilutive just by looking at the EPS and the terms of the convertible security?
By determining the savings on the conversion and dividing it by shares converted to. If the savings per share is lower than the EPS, the instrument is dillutive.
For interim reporting purposes, how should costs, that benefit multiple periods, be allocated?
Costs that benefit multiple periods should be allocated equally to those periods.
Under US GAAP, how should EPS data be reported for discontinued operations and income from continuing operations?
If the entity reports a discontinued operation, the entity presents the basic and diluted (if applicable) per share amounts for those items either on the face of the income statement or in the notes to the financial statements.
Basic and diluted per share amounts for income from continuing operations and for net income should be presented on the face of the income statement (or statement of income and comprehensive income if the entity is using the one-statement approach) with equal prominence.
All public entities must present earnings per share on the face of the income statement. In a simple capital structure, basic EPS for income from continuing operations and net income are presented. In a complex capital structure, basic and diluted EPS must be presented for income from continuing operations and net income.
Regulation S-X
Sets forth the form and content of and requirements for interim and annual financial statements to be filed with the SEC.
Regulation S-T
Sets forth rules governing electronic filings.
Regulation S-B
Sets forth the disclosure requirements for small business issuers.
Regulation S-K
Sets forth non-financial reporting requirements for various SEC filings used by public companies.
When should the gain on the sale of equipment be reported?
During the quarter incurred.
