|January 1, 2018||Shares outstanding||4,040,000|
|April 1, 2018||Shares issued||633,000|
|July 1, 2018||Treasury shares purchased||235,000|
|October 1, 2018||Shares issued in a 100% stock dividend||4,438,000|
The number of shares to be used in computing earnings per common share for 2018 is?
What Is Earnings Per Share:
A company's Earnings Per Share is reported on the final line of the income statement and is very relevant to investors. This is because the Earnings Per Share reflects the net income attributable to every single common share outstanding.
Answer and Explanation:
We need to pro-rate the number of shares outstanding based on the amount of months relevant to each event.
=4,040,000 *3/12 + (4,040,000+633,000)*3/12+(4,040,000+633,000-235,000 )*3/12+(4,040,000+633,000-235,000 )*2*3/12
The number used will thus be 5,506,750 shares.
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Learn more about this topic:
from Introduction to Business: Homework Help ResourceChapter 24 / Lesson 14