Basic and Diluted Earnings Per Share
Assume that the following data relate to Bass, Inc. for the year 2004:
Net income (30% tax rate) $3,100,000
Average common shares outstanding 2004 1,000,000 shares
10% cumulative convertible preferred stock:
Convertible into 80,000 shares of common $1,600,000
8% convertible bonds; convertible into 75,000
shares of common $2,500,000
Exercisable at the option price of $25 per share;
average market price in 2004, $30 90,000 shares
(14) basic earnings per share, and
(15) diluted earnings per share.
Primary EPS is calculated using the number of shares that have been issued and held by investors. These are ...
This provides the steps to calculate the diluted EPS.