FAR 16 - EPS Flashcards
1
Q
Earnings Per Share
(Basic)
A
+Net Income
- Preferred Div’s
(add cumulative for current year even if it is not declared)
= Available to C/S
/ Weighted Avg C/S outstanding
= EPS
NOTE: CS Dividends are NOT weighted, considered outstanding througout the year regardless of when it was issued.
2
Q
Earnings Per Share
(Complex)
A
+Net Income
+ Preferred Divs (not net of tax)
+ Int Exp saved from Convertible Bonds (NET OF TAX)
+ Stock Options (Treasury Stock Method)
= Available to C/S (NUMERATOR)
/ Wtd Avg of C/S + #shares of Pref Div/Bonds converted
= Diluted EPS
Numerator - Increased by NI & dividends or after tax interest expense that would onot have been due if securities had been converted to CS
Denominator - No Weighting is Required
