$----$The Following Information$/$Schedule sets forth the Current Portion & Long$-$Term Portion

of the Debt and the Shareholder$$s Equity of the Humza Mohammed Corporation as at

December $31$st$,20$X$2.$ The President Steven J$.$ Nguyen, has requested that you Assist

the Controller Can Emir Sakarcan in Preparing Figures for the Required Earnings Per

Share Calculations.

Humza Mohammed Corporation

Statement of Financial Position

For the Year Ended December $31,2020$

Assets

Current Liabilities:

Notes Payable $......................................................................................$ $ $4,000,000$

Current Portion of Long$-$Term Debt $.....................................................10,000,000$

Total Current Liabilities $........................................................................$ $ $14,000,000$

Long Term Liabilities:

$4\mathrm{.}0\%$ Convertible Debenture$/$Bonds $...........................$ $ $30,000,000$

Other Long$-$Term Debt $($Net of Current Portion$)..........20,000,000$

Total Long$-$Term Liabilities $...................................................................50,000,000$

Total Liabilities $....................................................................................$ $ $64,000,000$

Shareholder$$s Equity:

$$4\mathrm{.}00$ Cumulative Convertible Preferred Shares,

No Par Value; Authorized $2,000,000$ Shares,

Issued and Outstanding $1,200,000$ Shares,

Liquidating Preference; $$30\mathrm{.}00$ Per Share,

Aggregating $$36,000,000............................................$ $ $24,000,000$

Common Shares, No Par Value;

Authorized $20,000,000$ Shares;

Issued and Outstanding $7,000,000$ Shares,

Including $500,000$ Shares Held In Treasury $................11,200,000$

Retained Earnings $.......................................................76,500,000$

Total $............................................................................$ $ $111,700,000$

Less: Cost of the $500,000$ Common Shares

Held in Treasury $($Acquired Prior to $20$X$2)...................(900,000)$

Total Shareholder$$s Equity $...................................................................$ $ $110,800,000$

Total Liabilities & Shareholder$$s Equity $...............................................$ $ $174,800,000$

Additional Information:

$1.$ The Other Long$-$term Debt and the related amounts due within one year are

amounts due on an unsecured Promissory Note that require payments each year to

maturity. The effective interest rate on these Debentures range from $6\mathrm{.}0\%$ to $7\mathrm{.}0\%.$

$2.$ The $4\mathrm{.}0\%$ Convertible Bond$/$Debenture were issued at their Face Value of

$$30,000,000$ in $20$X$0.$ The Bond$/$Debenture is due in Twenty Years and until then are

Convertible into Common Shares of the Mohammed Corporation at the Rate of

Twenty$-$Five $(25)$ for each $$1,000$ Bond Debentures.

$3.$ The $$4\mathrm{.}00$ Cumulative Convertible Preferred Shares were issued in $20$X$1.$ The

shares had a Market Price$/$Value of $$75\mathrm{.}00$ at the time of Issuance. On July $1$st$,20$X$2$

and October $1$st$,20$X$2$ holders of the Preferred Shares Converted $80,000$ and $20,000$

Preferred Shares, respectively into Common Shares. Each Preferred Shares is

convertible into $1\mathrm{.}2$ Common Shares.

$4.$ On April $1$st$,20$X$2.$ The Humza Mohammed Corporation Company acquired the

Assets and Business of Jasminka Milovanovic Industries by the Issuance of $600,000$

of Humza Mohammed Corporation$$s Common Shares.

$5.$ On October $1$st$,20$X$0,$ the Corporation granted Options to its key Executives$/$Officers

and a few Selected Employees to Purchase $120,000$ of the Humza Mohammed

Corporation Common Shares at an Option Price of $$20\mathrm{.}00.$ The Market Price on

December $31$st$,20$X$2$ was $$100\mathrm{.}00$ Per Share. The Executive Stock Options are not

Exercisable until January $1$st$,20$X$4.$

$6.$ Dividends on the Preferred Shares have been paid through December $31,20$X$2.$

The Dividends on the Preferred Shares are Paid Quarterly. The Dividends Paid on

the Common Shares were $$\mathrm{.}50$ per Share Each Quarter.

$7.$ The Net Income for the Humza Mohammed Corporation for the Year Ended

December $31$st$,20$X$2$ was $$27,800,000.$ There were No Gains or Losses from

Discontinued Operations. The Provision for Income Taxes was Calculated at a Rate

of $34\mathrm{.}0\%.$ The Annual Average Rate of Return $($Pre$-$Tax$)$ on Invested Capital was

$10\mathrm{.}0\%.$

Required:

$1.$ What Type of Capital Structure is it$?$

$2.$ What type of EPS is required?

$3.$ Calculate the Required EPS