On 1/1/19 Karitas Inc., a calendar year company, has 900,000 common shares outstanding. Over the course of the fiscal year, the company experiences the following events: Common stock related events: 3/1/2019 issues 180,000 common shares 5/1/2019 Distributes a 10.00% stock dividend. 8/1/2019 Purchases 45,000 shares of treasury stock. 10/1/2019 issues a 2 for 1 stock split 12/31/2006 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 19.00% dividend and is convertible into 2 shares of common stock. Convertible bonds with an aggregate par value of $5,500,000. The bonds are sold in increments of $1,000; pay a 9.00% coupon and are convertible into 100 shares of common stock. 175 call option contracts with a strike price of $13.00 per share. Each option contract is exercisable into 130.00 shares of common stock. The average stock price over the fiscal year is $20.00 per share The firm has net income of $5,000,000 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 900,000 common shares outstanding. Over the course of the fiscal year, the company experiences the following events:
Common stock related events:
3/1/2019 issues 180,000 common shares
5/1/2019 Distributes a 10.00% stock dividend.
8/1/2019 Purchases 45,000 shares of
10/1/2019 issues a 2 for 1 stock split
12/31/2006
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
Convertible bonds with an aggregate par value of $5,500,000. The bonds are sold in increments of $1,000; pay a 9.00% coupon and are convertible into 100 shares of common stock.
175 call option contracts with a strike price of $13.00 per share. Each option contract is exercisable into 130.00 shares of common stock. The average stock price over the fiscal year is $20.00 per share
The firm has net income of $5,000,000 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
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