Net income for the company for the year was $300,000,and 100,000 shares of common stock were outstanding during theyear. The income tax rate is 30%. For each of the followingpotentially dilutive securities, perform the shortcut antidilutiontest to determine whether the security is dilutive. Assume thateach of the securities was issued on or before January 1. Treateach security independently; in other words, when testing onesecurity, assume that the others do not exist. (10)
1. 10,000 convertible preferred shares (cumulative, 5%, $100 par).Each preferred share is convertible into three shares of commonstock.
2. 500 convertible bonds ($1,000 face value, 10%). Each bond isconvertible into 25 shares of common stock.
3. 20,000 convertible preferred shares (cumulative, 10%, $50 par).Each preferred share is convertible into two shares of commonstock.
4. 2,000 convertible bonds ($1,000 face value, 8%). Each bond isconvertible into 15 shares of common stock.
(b) Is It Possible For A Company To Have Positive Cash Flow ButStill Be In Serious Financial Trouble?
