Werth Corporation earned $260,000 during a period when it had an average of 100,000 ordinary shares outstanding.

Question:

Werth Corporation earned $260,000 during a period when it had an average of 100,000 ordinary shares outstanding. The ordinary shares sold at an average market price of $15 per share during the period. Also outstanding were 30,000 warrants that could be exercised to purchase one ordinary share for $10 for each warrant exercised.

Instructions

(a) Are the warrants dilutive.

(b) Compute basic earnings per share.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...