Gerard Corporation has the following convertible bonds. A $100,000 convertible bond was issued at par on January 1, 2021, at 4%. The bond is convertible into 30,000 shares of common stock. Additionally, there was a convertible bond that was purchased on November 1, 2021, at par, for $200,000 with an interest rate of 6%, this bond is convertible into 20,000 shares of common stock. Both bonds pay interest annually. Gerard Corporation has total revenue of 800,000 and expenses of 400,000, which does not include interest expense or taxes. The tax rate is 40%. Additionally, the organization currently has 300,000 shares of common stock outstanding for the entire year. No dividends were paid in 2021. Calculate Earnings per share. Calculate Dilutive Earnings per share using the if converted method.
Gerard Corporation has the following convertible bonds. A $100,000 convertible bond was issued at par on January 1, 2021, at 4%. The bond is convertible into 30,000 shares of common stock. Additionally, there was a convertible bond that was purchased on November 1, 2021, at par, for $200,000 with an interest rate of 6%, this bond is convertible into 20,000 shares of common stock. Both bonds pay interest annually.
Gerard Corporation has total revenue of 800,000 and expenses of 400,000, which does not include interest expense or taxes. The tax rate is 40%. Additionally, the organization currently has 300,000 shares of common stock outstanding for the entire year. No dividends were paid in 2021.
- Calculate Earnings per share.
- Calculate Dilutive Earnings per share using the if converted method.
Earnings per share, or EPS, is a major financial metric that shows a company's profitability. It is calculated by dividing the company's net income by the total number of shares that are currently outstanding. This method is frequently used by market participants to assess a company's profitability before investing in its stock.
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