Information from the financial statements of Henderson-Niles Industries included

Question

Information from the financial statements of Henderson-Niles Industries included the following at December 31, 2018:

Henderson-Niles’s net income for the year ended December 31, 2018, is $820 million. The income tax rate is 40%. Henderson-Niles paid dividends of $3 per share on its preferred stock during 2018.

Required:
Compute basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Common shares outstanding throughout the year 100 million Convertible preferred shares (convertible into 20 million shares of common) 40 million Convertible 10% bonds (convertible into 18.0 million shares of common) $ 2,100 million Numerator | / | Denominator | = | Earnings per share Basic Diluted

Explanation / Answer

Henderson Niles Computation of Basic & Diluted earning per share for the year ended Decemebr 31, 2018 Numerator Denominator     = Earnings per share Basic 820 100     = 8.2 Diluted 1066 138     = 7.72 Note Calculation of Numerator for diluted earning per share Net Income 820 Add : Preferred dividend 120 Add Interest Net of taxes =(2100*10%*(1-0.4) 126 Total adjusted Net Income=Numerator 1066 Calculation of denominator for diluted earning per share No. of common stock outstanding throught the year 100 Preferred shares to be converted into no. of common shares 20 10% Bonds to be converted into No. of common shares 18 Total No. of potential shares = Denominator 138

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---