The ordinary share transactions of Caltown Financing Inc. and net income for its latest three years are summarized below: 

Caltown does not have any preferred shares outstanding. 

Required: 

a. Calculate the weighted average number of ordinary shares outstanding in each of 2021, 2022, and 2023. 

b. Calculate basic EPS for each of 2021, 2022, and 2023. 

c. Assume that Caltown includes three years of financial statement data in its annual report. Calculate the weighted average number of ordinary shares that would be used to calculate basic EPS in 2021, 2022, and 2023 as reported in Caltown’s annual report for the year ended December 31, 2023. 

d. Calculate basic EPS for each of 2021, 2022, and 2023 based on the weighted average number of ordinary shares outstanding that you determined in part (c). 

e. Your answers to part (b) and part (d) represent two sets of EPS statistics for the same company. Does the unadjusted or adjusted set of EPS statistics provide investors with better information for decision-making purposes? Why?

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Net income Ordinary shares Outstanding January 1 Issued April 1, 2021 Repurchased February 1, 2022 15% stock dividend May 1, 2022 Issued April 1, 2023 1.5-for-1 stock split October 1, 2023 Outstanding December 31 2021 $300,000 100,000 25,000 125,000 2022 $250,000 125,000 (35,000) 13,500 103,500 2023 $350,000 103,500 46,500 75,000 225,000