F8 - M1 - Earnings per Share

Question 1

An entity’s ____________ determines the manner in which earnings per share are disclosed on the income statement.

Answer 1

capital structure

Question 2

An entity that issues only common stock (no other securities that can be converted to common stock) has a ___________ structure.

Answer 2

simple capital structure.

Question 3

__________ assumes no potentially dilutive securities.

Answer 3

Basic EPS

Question 4

__________ divides income available for common shareholders by the weighted average number of common shares outstanding.

Answer 4

Basic EPS

Question 5

What is the calculation for Basic EPS

Answer 5

income available for common shareholders (net income - preferred dividends)/ weighted average number of common shares outstanding.

Question 6

An entity has a ____________ when it has securities that can be potentially converted to common stock and would therefore dilute or reduce EPS.

Answer 6

complex capital structure

Question 7

Diluted EPS employs the ______ and/or ______ methods to recompute EPS as it would be if any dilutive securities such as convertible bonds of preferred stock, rights, warrants, and options were exercised.

Answer 7

“if converted” or “treasury stock”

Question 8

Are Antidilutive securities are considered.

Answer 8

No

Question 9

_________, especially cumulative issues, cause calculation difficulties, as ________ are not available for common shareholders and preferred dividends do not reduce net income.

Answer 9

Preferred stock; preferred claims

Question 10

___________, if dilutive, are part of the basic EPS calculation if all conditions for issuance are met.

Answer 10

Contingent shares

Question 11

______ Preferred stock - only deduct from Income in the year declared

Answer 11

Non-cumulative

Question 12

Non-cumulative Preferred stock - you only deduct from Income in the year ___________

Answer 12

declared

Question 13

______ Preferred stock - deduct from income every year irrespective of the fact whether declared or not

Answer 13

cumulative

Question 14

________ preferred Stock dividend is a financial cost deducted to arrive at Net income

Answer 14

Redeemable preferred stock

Question 15

________ preferred stock dividend is deducted from Net Income

Answer 15

Irredeemable preferred stock

Question 16

________ preferred stock will be presented in the ___________ section of the balance sheet

Answer 16

Redeemable preferred stock ; non current liabilities

Question 17

________ preferred stock will be presented in the ___________ section of the balance sheet

Answer 17

Irredeemable preferred stock; Stock holders equity

Question 18

For weight average number of common shares outstanding, stock splits and stock dividends are adjusted _________

Answer 18

retroactively

Question 19

If exercise price is less than Market Price then Options EPS is

Answer 19

Dilutive

Question 20

If exercise price is more than Market Price then Options EPS is

Answer 20

Anti-Dilutive

Question 21

What is the calculation for Options and warrants

Answer 21

Number of shares - Exercise Price X Number of shares/ Average Market price

Question 22

The earnings per share must be reported not he face of the public company’s income statement for the following items (3)

Answer 22

1. Income from continuing ops, 2) Income from discounted operations. 3) Net income

Question 23

The interest expense is ______ to net income in determining dilutive EPS for ___________.

Answer 23

added back; Convertible Debt

Question 24

Under the What if method, the security is assumed to have been converted at the ____________________ (or at time of issuance, if later).

Answer 24

beginning of the earliest period reported