Clark Companys capital structure consists of common stock and convertible bonds. At the beginning of 2007 the
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Clark Company’s capital structure consists of common stock and convertible bonds. At the beginning of 2007 the company had 15,000 shares of common stock outstanding; an additional 4,500 shares were issued on May 4. The 7% convertible bonds have a face value of $80,000 and were issued in 2004 at par. Each $1,000 bond is convertible into 25 shares of common stock; to date, none of the bonds has been converted. During 2007, the company earned net income of $79,200 and was subject to an income tax rate of 30%.
Required
Compute the 2007 diluted earnings per share.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Related Book For 
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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