On 1/1/19 Karitas Inc., a calendar year company, has 700,000 common shares outstanding. Over the course of the fiscal year, the company experiences the following events: Common stock related events: 3/1/2019 issues 140,000 common shares 5/1/2019 Distributes a 10.00% stock dividend. 8/1/2019 Purchases 40,000 shares of treasury stock. 10/1/2019 issues a 3 for 1 stock split The firm also has the following securities outstanding for the entire year (all conversion rates already reflect the effect of the stock dividend and stock split): 50,000 shares of convertible preferred stock. The convertible preferred stock has a par value of $10 per share, pays a 14.00% dividend and is convertible into 3 shares of common stock. Convertible bonds with an aggregate par value of $8,500,000. The bonds are sold in increments of $1,000; pay a 6.50% coupon and are convertible into 100 shares of common stock. 175 call option contracts with a strike price of $14.00 per share. Each option contract is exercisable into 140.00 shares of common stock. The average stock price over the fiscal year is $20.00 per share The firm has net income of $6,150,000 and the corporate tax rate is 21.00%. A) Calculate the weighted average number of shares outstanding at 12/31/19 B) Calculate basic EPS C) Calculate whether each security in the firm's capital structure is dilutive D) Calculate fully-diluted EPS
On 1/1/19 Karitas Inc., a calendar year company, has 700,000 common shares outstanding. Over the course of the fiscal year, the company experiences the
following events:
Common stock related events:
3/1/2019 issues 140,000 common shares
5/1/2019 Distributes a 10.00% stock dividend.
8/1/2019 Purchases 40,000 shares of
10/1/2019 issues a 3 for 1 stock split
The firm also has the following securities outstanding for the entire year (all conversion rates already reflect the effect of the stock dividend and stock split): 50,000 shares of convertible
shares of common stock.
Convertible bonds with an aggregate par value of $8,500,000. The bonds are sold in increments of $1,000; pay a 6.50% coupon and are convertible into 100 shares
of common stock.
175 call option contracts with a strike price of $14.00 per share. Each option contract is exercisable into 140.00 shares of common stock. The average stock price
over the fiscal year is $20.00 per share
The firm has net income of $6,150,000 and the corporate tax rate is 21.00%.
A) Calculate the weighted average number of shares outstanding at 12/31/19
B) Calculate basic EPS
C) Calculate whether each security in the firm's capital structure is dilutive
D) Calculate fully-diluted EPS
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 8 images
