Question: Werth Corporation earned $260,000 during a period when it had an average of 100,000 shares of common stock outstanding. The common stock sold at an

Werth Corporation earned $260,000 during a period when it had an average of 100,000 shares of common stock outstanding. The common stock sold at an average market price of $15 per share during the period. Also outstanding were 30,000 warrants that could be exercised to purchase one share of common stock for $10 for each warrant exercised.

Instructions

(a) Are the warrants dilutive?

(b) Compute basic earnings per share.

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a Diluted The warrants are dilutive because the option price 10 is less than the average market ... View full answer

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