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Compute the diluted earnings per share

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Question - During all of 2021, ORANGE Manufacturing Company had 950,000 shares of ordinary share outstanding. On June 30, 2021, the company issued 10,000 7 percent convertible bonds at par. The maturity value of each bond is P1,000. Each bond is convertible into 20 shares of ordinary share. None were converted during 2021.

ORANGE also had 60,000 share warrants outstanding for all of 2021. The option price is P10 per share. The market price of the ordinary share was P40 on December 31, 2021, and the average market price for 2021 was P30.

ORANGE reported a net income of P3,650,000 for 2021. Assume the company had a 30 percent income tax rate.

Requirement -

1. Compute the basic earnings per share.

2. Compute the diluted earnings per share.

Reference no: EM132820608

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