ABC Ltd. earned a 2019 net income of $1,590,000 and had 2,010,000 common shares outstanding...
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ABC Ltd. earned a 2019 net income of $1,590,000 and had 2,010,000 common shares outstanding on January 1, 2019. ABC Ltd. issued an additional 300,000 common shares on January 1, 2019. Then on August 1, 2019, ABC redeemed 60,000 common shares. Total dividends declared in 2019 on the preferred shares amounted to $200,000. ABC's tax rate is 10%. During 2019, the average trading price of ABC Ltd.s common stock was $17/share. Information about ABC's complex capital structure is as follows:
Convertible Preferred shares:
5,000 preferred shares, non-cumulative dividend of 4%, and each $1,000 preferred share is convertible into 48 common shares.
Stock Options:
At the beginning of 2019, the CEO of ABC had options to acquire 200,000 common shares at an option price of $13/share.
Convertible bonds:
5,000 bonds, coupon/interest rate of 2%, and each $1,000 bond is convertible into 50 common shares.
Calculate basic earnings per share and diluted earnings per share for 2019 assuming the CEO exercised 30,000 of options on July 31, 2019. Round all EPS calculations to 3 decimals.
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