What is meant by dilution of earnings per share

Assignment Help Accounting Basics
Reference no: EM131807988

Problem - Karen Company had 105,000 shares of common stock outstanding on January 1, 2011. On August 30, 2011, Karen sold 50,000 shares of common stock for cash. Karen also had 11,000 shares of convertible preferred stock outstanding throughout 2011. The preferred stock is $105 par, 5%, and is convertible into 4 shares of common for each share of preferred. Karen also had 400, 8%, convertible bonds outstanding throughout 2011. Each $1,000 bond is convertible into 35 shares of common stock. The bonds sold originally at par. Reported net income for 2011was $350,000 with a 35% tax rate. The regular common and preferred dividends were paid in 2011.

Requirements:

1. Compute basic and diluted earnings per share for 2011?

2. What is meant by dilution of earnings per share?

3. What is the "if converted method"?

Reference no: EM131807988

Questions Cloud

Poor search for better alternatives : Describe a situation in which a poor alternative was selected because there was a poor search for better alternatives.
Maximize the difference between output and input : The three economic criteria for choosing the best alternative are maximize the difference between output and input
How the problem or issue impacts the organization : Be attentive to identifying how the problem or issue impacts the organization and its competitive position within the industry.
Discuss what is shoe market''s taxable income : The Walstore Shoe Market had $1871000 of shoe sales and its cost for these shoes was $685000
What is meant by dilution of earnings per share : Karen Company had 105,000 shares of common stock outstanding on January 1, 2011. Compute basic and diluted earnings per share for 2011
Find values of current for circuit using offset diode model : Find the values of I and V0 for the Circuit of Fig 1, using Offset Diode Model. Verify result
Maintain a contribution format segmented income statement : What would have been the company's absorption costing net operating income (loss) if it had produced and sold 37,000 units?
Discuss the acquisition bmis book value : JDE stock had a market value of $14.90 per share and there was no control premium
What number of units should the firm sell : Fixed costs = $ 36,000; and Tax rate = 40%. What number of units should the firm sell to achieve an after tax target income of $ 6,000

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd