The Tansian Company had 200,000 shares outstanding on January 1, 2016. On March 1 Tansian issued...

Question:

The Tansian Company had 200,000 shares outstanding on January 1, 2016. On March 1 Tansian issued 125,000 shares. On June 1 Tansian issued a 12% stock dividend. On 8/1 Tansian repurchased 24,000 shares of treasury stock. On December 31, 2016, Tansian declared a 1.5 to 1 stock split.

Required:

What are the weighted average shares at December 31, 2016?

Earnings Per Share:

Companies report EPS usually together with their annual results. Earnings per share also generates the income attributable to each share. Investors don't just look at basic EPS but also diluted EPS to know the potential dilution in the company.

Answer and Explanation:

Determine the weighted-average number of shares outstanding as of December 31, 2015.

Weighted Average Number of Shares
January 1 200,000 shares x 112% x 1.5 336,000 shares
March 1 125,000 shares x 112% x 1.5 x (10 / 12) 175,000 shares
August 1 24,000 shares x 1.5 x (5 / 12) (15,000 shares)
Total 496,000 shares

When the company issues a stock dividend or stock split , it is treated retrospectively.

The shares are multiplied by portion of the reporting period that they are covered.


Learn more about this topic:

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How to Calculate Earnings Per Share: Definition & Formula

from Introduction to Business: Homework Help Resource

Chapter 24 / Lesson 14
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