Diluted Earnings per Share
SuperClassDiluted Earnings per Share—Convertible Bonds
Delgado Manufacturing Company reports long-term liabilities and stockholders’ equity balances at December 31, 2008, as follows:
Convertible 5% bonds (par) | $ 800,000 |
Common stock, $25 par, 100,000 shares issued and outstanding | 2,500,000 |
Additional information is determined as follows:
Conversion term of bonds—50 shares for each $1,000 bond |
|
Income before extraordinary items—2008 | $ 199,800 |
Extraordinary gain (net of tax) | 43,520 |
Net income—2008 | $ 243,320 |
Compute the basic and diluted EPS for the company for 2008, assuming that the income tax rate is 30%. No changes occurred in the debt and equity balances during 2008.
10 years ago
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diluted_earnings_per_share.xlsx
