EPS Accounting Report: Development and Problems Earnings per share is the portion of a company’s profit allocated to each outstanding share of common stock. The computation of earnings per share is income minus preferred stock dividends divided by weighted average number of shares of common stock outstanding at the end of the period. Earning per share is considered to be the single most important metric to determine a company’s profitability which is crucial to the decision making of potential
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Pancino Corporation owns a 90% interest in Sakal Corporation’s common stock. Throughout 2010‚ Sakal had 20‚000 shares of common stock outstanding and Pancino had 50‚000 shares of common stock outstanding. Sakal’s only dilutive security consists of 2‚500 stock options‚ with an exercise price of $20 per share. The average price of Sakal’s stock is $50 per share in 2010. The options are exercisable for one share of Sakal’s common stock. Pancino’s and Sakal’s separate net incomes for the year are
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Book value: The book value of ordinary share is the net worth of a corporation less the par value of preference shares outstanding divided by the number of ordinary shares outstanding. Suppose the net worth of a company contains the following information viz; Preference shares (Rs. 100 per share): 1000000.00 Ordinary share (Rs.5 per share): 1500000.00 Share premium:
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CHAPTER 22 EARNINGS PER SHARE Assignment Assistance Schedule Topic and Estimated Solution Time No. Topic Time* E22-1 Basic EPS calculations: multiple choice 20 E22-2 Calculating fully diluted EPS: multiple choice 40 E22-3 Fully diluted EPS: multiple choice 20 E22-4 Analyze the capital structure; average shares; compute EPS 20 E22-5 Analyze the capital structure; average shares; compute EPS 20 E22-6 Compute EPS for three years; stock dividend and split 15 E22-7 Analyze the
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Chapter 19 Share-Based Compensation and Earnings per Share True / False Questions 1. GAAP requires using intrinsic value accounting for employee stock options. True False 2. If previous experience indicates that a material number of stock options will be forfeited before they vest‚ the fair value estimate of the options on the grant date should be adjusted to reflect that expectation. True False 3. Compensation expense must be adjusted during the service period to reflect changes
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overall value of the firm‚ it should use debt to finance the $100 million purchase. Since interest payments are tax deductible‚ debt in the firm’s capital structure will decrease the firm’s taxable income‚ creating a tax shield that will increase the overall value of the firm. 2. Since Stephenson is an all-equity firm with 15 million shares of common stock outstanding‚ worth $32.50 per share‚ the market value of the firm is: Market value of equity = $32.50(15‚000‚000) Market value of equity
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1. Why might Bollenbach have opened his bidding for ITT at $55 per share? What was his likely strategy? The $55 value is on the lower range of the analyst eztimates‚ with a best guess estimate of $67.94. Since the value of the stock had been below $45 for 4 months‚ the offer of 55 dollars represented a 29% premium to investors. Bollenbach knew that management would be resistant of any attempt to be acquired‚ regardless of price‚ because of failed previous attempts to negotiate a friendly
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that you will be forced to take because of the regulatory obsolescence is material- nearly a 20 percent reduction in income will result. If you can sell the inventory in a foreign market‚ legally‚ there will be no write-down and no income reduction. A reduction of that magnitude would substantially lower share market price‚ which in i=turn would lead your large your large‚ institutional shareholders to demand explanations and possibly seek changes in your company’s board of directors. In short
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CHAPTER 1 1.1 INDUSTRY PROFILE 1.1.1 About this Industry: Finance and Share Market. [pic] 1.1.2 BSE • The Bombay Stock Exchange (BSE) (formerly‚ The Stock Exchange‚ Bombay) is a stock exchange is the oldest stock exchange in Asia. • The equity market capitalization of the companies listed on the BSE wasUS$1.63 trillion as of December 2010‚ making it the 4th largest stock exchange in Asia and the 8th largest in the world. • The BSE has the largest number of listed
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Effects of $3 Billion in New Debt for Dividend or Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 2 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 4 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 5 Appendices 5 i. Objectives This report seeks to answer the following five questions
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