F8 - EPS, Cash Flows and NFP Accounting Flashcards
WA # of Share O/S
Shares O/S BOY
+Shares Sold during the period
-Shares reacquired during period
+Stock Dividends/Stock Splits
-Reverse Stock Splits
=WA Shares O/S
WA Shares:
Multiply by O/S part of year
EPS: Dilutive Shares
Dilutive Contingent Shares can be included in the calculation for EPS
When computing WA # of shares, what mid-year event has to be treated as if it happened at the BOY?
Declaration and distribution of stock dividend.
Getting to Basic EPS: Calculation
Net Income
- Cumulative Preferred Stock
Dividend
= Income available to CS O/S
/ Average Common Shares o/s
=EPS
When calculating WA Basic EPS, how are convertible securities treated?
They are ignored.
How are shares issued treated when calculating WA EPS? Calculation included
Included in calculation
NOTE: don’t forget to multiply by months o/s
Multiply by:
- Months o/s (until next equity transaction)
- stock split
NOTE:
- Don’t forget to double amount outstanding at date of stock split but don’t multiply by 2 again.
- Total amount of month’s outstanding should be 12 (total o/s / 12 = WA)
Stock splits and Stock Dividends require what in regards to shares outstanding?
Restatement before the dividend/stock split. (As if it happen at the beginning of the year). Even if it happened in the next year, the prior year would nee to be restated
Interest Expense on convertible debt should be treated how in relation to net income and diluted earnings?
Added back to NI for diluted earnings
Ignored for Basic Earnings
NOTE: EPS
Typically assume WA EPS is used
Diluted EPS: Calculation
Adjusted NI:
NI \+Interest Expense -Tax Deduction eliminated (interest expense * TR) \+Discount Amortization =Adjusted NI
Adjusted shares o/s: CS Shares o/s \+Conversion of preferred \+Conversion of bonds =Adjust Shares o/s
(Adjusted NI / Adjusted Shares o/s)
=Diluted EPS
Computing Diluted EPS: With o/s shares during the year
(# of shares * months outstanding)
=WA shares o/s
Income Available for CS
/ (WA shares o/s)
=Basic/Diluted EPS
Diluted vs Basic EPS: Note
Diluted will always produce a lower EPS than Basic
Dilutive Effect of Options: Calculation
# of shares (exercisable
options)
- (#of shares x exercise
price) / Average MP
=Additional shares outstanding
Dividend Adjustment and WA CS o/s: Calculation
Total shares * Stock split
(done for each period
separately based on #’s
before split)
*period o/s
*(Adjustment for dividend)
(1 + % dividend)
=WA
Cumulative Preferred Stock and EPS: Calculation
IATCSH (Income available to common shareholders) is computed by deducting dividends declared in the period on “non-cumulative” preferred stock and “cumulative” preferred stock. Regardless of whether they have been paid and declared (respectively).
Cash Flows: What is not shown on the SCF when using the direct or indirect method?
Recon of Ending RE to Net Cash Flow from operations (instead this is a rec of NI to Net Cash Flow from operations)
Investment Activities Include:
Acquisitions and Sales of long-term assets or investment assets (buildings, equipment, bonds etc.)
Financing Activities Include:
Obtaining resources from owners and providing them with a return (dividends paid, borrowing money, repaying amounts borrowed)
Operating Cash Flows:
NI \+Increases in Liabilities -Increases in Assets \+Decreases in Assets -Decreases in Liabilities \+Depreciation Expense \+Losses on sale of equipment -Gains on sale of equipment \+Goodwill Impairment -Decrease in Taxes Payable
