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Calculating EPS and Multiple Securities
At the end of 2020, the records of Wolverine Corporation reflected the following.
| Common stock, $10 par; authorized 240,000 shares: issued and outstanding throughout the year, | | | |
| 120,000 shares | | | $1,200,000 |
| Preferred stock, $50 par, 7%, cumulative, convertible into common stock, share for share; | | | |
| authorized, 24,000 shares; issued and outstanding throughout year, 4,800 shares | | | 240,000 |
| Contributed capital in excess of par, common stock | | | 192,000 |
| Retained earnings (no dividends declared during the year) | | | 1,128,000 |
| Bonds payable, 10% nonconvertible, issued at par in 2016 | | | 360,000 |
| Net income | | | 264,000 |
| Stock options outstanding (all year for 24,000 shares of common stock at $15 per share) | | | |
| Income tax rate, 25% | | | |
| Average market price of the common stock during 2020, $25 per share | | | |
Required
a. Is this a simple or a complex capital structure?
| AnswerSimple structureComplex structure |
b. Compute the required EPS amounts.
- Note: Round earnings per share amounts to two decimal places.
- Note: If an amount is not required, leave the answer blank (zero).
| | Net Income Available to Common Stockholders | Weighted Avg. Common Shares Outstanding | Per Share |
| Basic EPS | Answer | Answer | Answer |
| Diluted EPS | Answer | Answer | Answer |
Answer & Explanation
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