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    mpoirier07's Avatar
    mpoirier07 Posts: 1, Reputation: 1
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    #1

    Nov 30, 2010, 07:37 PM
    Computing Basic and Diluted Earnings Per Share
    I need help computing this problem.

    Assume that the following data relative to Metro Co. for 2001 is available:
    Net Incom (30% tax rate): $3,200,000
    Transactions in common shares
    1/1 Beginning number 1,000,000 shares
    3/1 Purchase of treasury shares (60,000)
    6/1 Stock split, 2 for 1
    11/1 Issuance of shares 120,000
    9% cumulative convertible preferred stock
    Sold (in 2000) at par, convertible into 200,000 shares of common stock $1,000,000
    Stock Options
    Exercisable at the option price of $25 per share
    Average market price in 2001 is $30 60,000 shares
    Compute the basic and diluted earnings per share for 2001
    Just Looking's Avatar
    Just Looking Posts: 1,610, Reputation: 480
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    #2

    Dec 1, 2010, 05:20 PM


    This has been a popular subject lately. I hope you will look at similar questions. By definition, EPS is earnings divided by shares. Basic EPS uses the shares actually issued - i.e. current shares. Diluted EPS uses the shares that could potentially be issued if you count current shares, plus stock options, warrants, convertibles, and other potential sources of dilution that were currently exercisable were invoked. Diluted shares will always be a larger number than current shares, or equal if none of these things exists.

    We won't do the homework for you. Please see this announcement.

    https://www.askmehelpdesk.com/financ...ard-25444.html

    If you want to attempt it, we will check your answer. The shares actually issued are in your "Transactions in common shares section". The potential shares are listed below that.

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