F8 - M1 - Earnings per Share Flashcards
An entity’s ____________ determines the manner in which earnings per share are disclosed on the income statement.
capital structure
An entity that issues only common stock (no other securities that can be converted to common stock) has a ___________ structure.
simple capital structure.
__________ assumes no potentially dilutive securities.
Basic EPS
__________ divides income available for common shareholders by the weighted average number of common shares outstanding.
Basic EPS
What is the calculation for Basic EPS
income available for common shareholders (net income - preferred dividends)/ weighted average number of common shares outstanding.
An entity has a ____________ when it has securities that can be potentially converted to common stock and would therefore dilute or reduce EPS.
complex capital structure
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.
“if converted” or “treasury stock”
Are Antidilutive securities are considered.
No
_________, especially cumulative issues, cause calculation difficulties, as ________ are not available for common shareholders and preferred dividends do not reduce net income.
Preferred stock; preferred claims
___________, if dilutive, are part of the basic EPS calculation if all conditions for issuance are met.
Contingent shares
______ Preferred stock - only deduct from Income in the year declared
Non-cumulative
Non-cumulative Preferred stock - you only deduct from Income in the year ___________
declared
______ Preferred stock - deduct from income every year irrespective of the fact whether declared or not
cumulative
________ preferred Stock dividend is a financial cost deducted to arrive at Net income
Redeemable preferred stock
________ preferred stock dividend is deducted from Net Income
Irredeemable preferred stock
________ preferred stock will be presented in the ___________ section of the balance sheet
Redeemable preferred stock ; non current liabilities
________ preferred stock will be presented in the ___________ section of the balance sheet
Irredeemable preferred stock; Stock holders equity
For weight average number of common shares outstanding, stock splits and stock dividends are adjusted _________
retroactively
If exercise price is less than Market Price then Options EPS is
Dilutive
If exercise price is more than Market Price then Options EPS is
Anti-Dilutive
What is the calculation for Options and warrants
Number of shares - Exercise Price X Number of shares/ Average Market price
The earnings per share must be reported not he face of the public company’s income statement for the following items (3)
- Income from continuing ops, 2) Income from discounted operations. 3) Net income
The interest expense is ______ to net income in determining dilutive EPS for ___________.
added back; Convertible Debt
Under the What if method, the security is assumed to have been converted at the ____________________ (or at time of issuance, if later).
beginning of the earliest period reported
