Reference no: EM132493609
Basic and Diluted Earnings per Share
The following data relate to Schroeder Ltd. for the calendar year 2020:
Net income (30% tax rate)................................................................ $3,250,000
Average number of common shares
outstanding during 2020.............................................................. 1,200,000 shares
8%, cumulative convertible preferred shares:
convertible into 90,000 common shares................................... $1,800,000
6% convertible bonds; convertible into 60,000
common shares......................................................................... $2,000,000
Stock options, exercisable at $30 per share......................................... 105,000 shares
- All the convertible securities and stock options were outstanding all year. The average market price of the common shares in 2020 was $35.
Instructions
Question 1: Calculate:
a. basic earnings per share
b. diluted earnings per share.