Earnings per Share Analysis

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Assignment Assistance Schedule — Topic and Estimated Solution Time No.TopicTime*
E22-1Basic EPS calculations: multiple choice 20
E22-2Calculating fully diluted EPS: multiple choice 40
E22-3Fully diluted EPS: multiple choice20
E22-4Analyze the capital structure; average shares; compute EPS 20 E22-5Analyze the capital structure; average shares; compute EPS 20 E22-6Compute EPS for three years; stock dividend and split 15 E22-7Analyze the capital structure; stock dividend; compute EPS 15 E22-8Compute primary EPS; different kinds of gains and losses 20 E22-9Computing and reporting DEPS; different kinds of gains and losses 30 E22-10Complex capital structure and reporting EPS 15

E22-11Complex capital structure and reporting EPS under the 3% materiality test 15 E22-12Contingent shares and computing EPS 15
E22-13Options and computation of EPS 30
E22-14Convertible bonds and the calculation of primary and fully diluted EPS 30 E22-15Analyze capital structure; stock split; convertible securities; compute EPS 20 E22-16Analyze capital structure; nonconvertible preferred; stock rights; compute EPS15 E22-17Analyze capital structure; stock rights; preferred stock; compute EPS 25 E22-18Convertible securities: D/A method30

P22-1Analyze capital structure; stock dividend; convertible securities; compute EPS 40 P22-2Analyze capital structure; stock rights and convertible securities; compute EPS60 P22-3Complex capital structure; compute EPS for two alternatives 25 P22-4Analyze capital structure; convertible bonds sold at a premium; compute EPS 30 P22-5Analyze capital structure; stock warrants; nonconvertible securities; compute EPS

P22-6Analyze capital structure; stock dividend; convertible securities; compute EPS55 P22-7Computing a loss per share 30
P22-8Computing of average shares outstanding and EPS 45
P22-9Determination of capital structure, calculation and reporting of EPS 40 P22-10Computing basic and diluted EPS 60
P22-11Computing and reporting DEPS 30
P22-12Appendix, computing the average market price of common stock 60 P22-13Chapter or Appendix, application of treasury stock method for options (this problem is easily adapted to the chapter alone by changing the requirement to deal only with the end-of-year stock prices)

P22-14Comprehensive problem calculating earnings per share 120 P22-15Convertible bonds, amortization20
P22-16Convertible securities, actual conversion, antidilution35

P22-17D/A method30
P22-18Appendix: Treasury stock method30
P22-19Contingent share agreement40
C22-1Importance of EPS figures 40
C22-2The logic for some EPS calculations 60
C22-3Coca-Cola: EPS issues 90
A22-1EPS disclosures: American Home Products 45
A22-2EPS Calculations: Pfizer60
CA22-1Comparative analysis60

*Minutes, assuming working papers are used.

Understanding and Applying Concepts and Standards
Answers to Questions
1. In a simple capital structure, a single presentation of the basic amounts for earnings per share is presented. A simple capital structure is one in which stockholders' equity either consists only of common stock or does not contain convertible securities, stock warrants, or other rights convertible to common stock.

If a firm has a complex capital structure, it presents:
Fully diluted EPS—this calculation is based on common stock plus the number of shares of common stock that would be issued assuming all convertible securities, warrants, etc. with dilutive effects are converted to common stock. This calculation represents maximum dilution of EPS. 2. Yes, because basic EPS treats all preferred stock the same way, whether or not convertible. The dividends reduce the actual return to common shareholders because the preferred was not converted during the period. 3....
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