Predict the amounts that the firm will announce for (Basic) Earnings Per Share and Fully-Diluted Earnings Per Share.

You are an analyst waiting for a firm's year-end conference call to start and are looking at its just-released financial statements.

• The firm has issued 20,000 Common Shares, but has repurchased 4,000 shares of Treasury Stock.
• The firm earned $34,000 Net Income during the year.
• The firm has issued 2,000 shares of $25 Preferred Stock which pay a 4% annual Preferred Dividend (i.e., $1 per year to each share). The Preferred Shares can be exchanged for 1,000 Common Shares. None of the shares have been converted.
• The firm has issued $100,000 of Convertible Bonds which pay 3% annual Interest, and which are convertible into 2,000 Common Shares. None of the bonds have been converted.
• The firm's Tax Rate is 30%.

Answer rating: 100% (QA)

To calculate both Basic Earnings Per Share EPS and FullyDiluted Earnings Per Share EPS we need to co... View the full answer