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Basic and Dulited EPS

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Mooretown incorporated has 1,7500,000 shares of common stock outstanding on Dec 31, 2014. An additional 125,000 shares of common stock were issued on Feb 1, 2015 and also on May 1, 2015. Oct 1, 2015 Mooretown issued 3,000, $1,000 face value, 8% convertible bonds. Each bond is convertible into 50 shares of common stock in 2015.

Compute the number of shares to be used in

(1) Basic EPS
(2) Diluted EPS

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Solution Summary

The expert examines the basic diluted EPS.

Solution provided by:
Education
  • Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
  • Bachelor of Commerce, West Bengal University
Recent Feedback
  • "I got this feedback and I wanted to know if you can explain it to me. I noticed something within your workings which I believe is incorrect.  It looks like you've mistaken the Debt ratio for the Equity Multiplier.  You've done a calculation to determine Return on Equity (ROE) but if you take a look at the ratios provided for us you'll see ROE listed on the bottom line already.  You can use ROE, Profit Margin and Total Asset Turnover to figure out the Equity Multiplier amount.  Equity multiplier is not provided for us and we need to calculate it.  I really hope this is helpful to you.  "
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