Earnings per share - basic and diluted
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Assume that the following data relative to Eddy company for 2004 is available:
Net Income: $1,400,000
Transactions in Common shares change cumulative
1/1/04, beginning number 500,000
3/1/04 (60,000) 440,000
6/1/04 440,000 880,000
11/1/04, Issuance of shares 120,000 1,000,000
8% cumulative convertible preferred stock
sold at par, convertible into 200,000 shares
of common (adjusted for split) $1,000,000
Stock options
Exercisable at the option price of $25 per share.
Average market price in 2004, $30
(market price and option price adjusted for split) 600,000 shares
Instructions:
(A) compute the basic earnings per share for 2004. (Round to the nearest penny.)
(B) compute the diluted earnings per share for 2004. (Round to the nearest penny.)
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Solution Summary
The solution explains how to calculate the basic and diluted earnings per share
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