Donut Corp had 1,500,000 shares of common stock outstanding and the beginning of 2021. At...
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Accounting
Donut Corp had 1,500,000 shares of common stock outstanding and the beginning of 2021. At the end of the year, Donut reported net income of $5,000,000. Consider the other available information.
On June 1, 2021, Donut executed a 2 for 1 stock split.
Donut repurchased 500,000 shares of its own stock on October 1, 2021.
Donut had 150,000 stock options that had a strike price of $20. Donut also had 200,000 executive stock options outstanding with a strike price of $10. The market value of Donut's stock was $40.
Donut also had $2,000,000 of 8% convertible debt that was convertible into 200,000 shares of common stock.
Donut's tax rate is 40%.Â
Required:
a. Compute the weight average shares outstandingÂ
b. Compute basic EPSÂ
c. Show the numerator/denominator effects of each potentially dilutive security and label as dilutive or anti-dilutive.
d. Compute diluted EPSÂ
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