A firm has 400 preferred stocks outstanding. It started the year with 900 common stocks and over the year, had the following transactions:
Feb 15 Issued 300 common shares.
May 1 Redeemed 100 preferred shares.
Aug 15 Repurchased 150 common shares.
Nov. 30 Issued 400 common shares.
In the calculation of EPS, the number in the denominator would be closest to:
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A. B. C. D.B
The number of preferred stocks is not relevant in the calculation of the denominator of simple EPS. It had 900-150 = 750 shares for 12 months, 150 shares for 7.5 months (repurchased in Aug), 300 shares for 10.5 months (issued in Feb) and 400 shares for 1 month (issued in Nov). Hence, weighted # of shares = 750 +
(7.5/12*150) + (10.5/12*300) + (1/12*400) = 1,139.6