One way of improving a company's EPS is to reduce the number of shares outstanding. Access the

Question:

One way of improving a company's EPS is to reduce the number of shares outstanding. Access the for BCE Inc. for the year ended December 31, 2011, from the company's website (www.bce.ca) or SEDAR. Excerpts from the 2009 have also been provided below:
Note 8: Earnings Per Share
The following table is a reconciliation of components used in the calculation of basic and diluted earnings per common share from continuing operations.

(1) The calculation of the assumed exercise of stock options includes the effect of the average unrecognized future compensation cost of dilutive options. It does not include anti-dilutive options, which are options that would not be exercised because their exercise price is higher than the average market value of a BCE Inc. common share. The number of excluded options was 10,508,239 in 2009, 4,646,531 in 2008 and 5,278,529 in 2007.
Instructions
(a) What per share information has the company provided each year?
(b) What types of shares does the company have outstanding? What are the dividend payments required on these shares?
(c) How have the earnings from continuing operations been determined for each year from 2007 to 2011? Why has this adjustment been made? Why were the earnings for 2007 and 2008 significantly different from the other years presented? You may need to refer to the relevant years' financial statements for details.
(d) What has the weighted average number of shares been each year for the period 2007 to 2011 for the basic EPS? Why does this change from year to year? Recalculate the basic earnings per share from continuing operations as if the weighted average number of shares outstanding had remained the same since 2007. Assuming that the company's share price trades at around 12 times earnings, what has been the impact each year of the reduction in the number of shares on the share price?
(e) Review the calculation of the diluted earnings per share. What has caused the dilution impact? What has been excluded from the calculation and why?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...