Earnings per share (EPS) : The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock , and stock options, reduce the EPS by increasing the common shares. Use the following formula to determine EPS: Earnings per share } = Earnings available to common shareholders Weighted average number of common shares outstanding = Net income –Preferred dividends Weighted average number of common shares outstanding To define : The potential dilutive shares.

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Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

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Answer 2

Question

Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

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Answer 3

Question

Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

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Answer 4

Question

Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

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Answer 5

Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

Answer 6

Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

Answer 7

Chapter 19, Problem 19.7BYP

(1)

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To define: The potential dilutive shares.

Answer 8

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

Answer 9

(2)

To determine

To describe: The effect of convertible bonds on diluted EPS

Answer 10

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

Answer 11

(3)

To determine

To describe: The reason for not including convertible debentures while computing diluted EPS.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 19 - Prob. 19.1Q Ch. 19 - Prob. 19.2Q Ch. 19 - The Tax Code differentiates between qualified...Ch. 19 - Stock option (and other share-based) plans often...Ch. 19 - What is a simple capital structure? How is EPS...Ch. 19 - Prob. 19.6Q Ch. 19 - Blake Distributors had 100,000 common shares...Ch. 19 - Why are preferred dividends deducted from net...Ch. 19 - Prob. 19.9Q Ch. 19 - The treasury stock method is used to incorporate...

Solution Summary: The author explains that dilutive securities like convertible bonds, preferred stock, and stock options reduce the EPS by increasing the common shares.

To describe: The effect of convertible bonds on diluted EPS

To describe: The reason for not including convertible debentures while computing diluted EPS.

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Chapter 19 Solutions