Wiley 423 week 2 assigment
In order to determine the number of shares used to compute diluted earnings per share for the year ended December 31, 2013, it is first necessary to look at the company’s financial statements. In particular, we will need to examine the statement of retained earning which outlines all income and expenses related to operations as well as any dividends paid out during the period. From this statement, we can determine what items should be included in computing diluted earnings per share such as convertible debt or preferred stock.
Next, we need to calculate how many additional shares would have been issued had those items been converted into common stock at their market value on December 31st. This can be done by multiplying each item’s conversion rate by its market price on that date and then adding up all of these totals. Finally, once all calculations are complete we can add this figure to our previously calculated weighted average number of common stock outstanding (from our finance textbooks) and this will give us our total number of shares used for computing diluted EPS for the given period.