How is basic EPS different from diluted EPS? When calculating diluted EPS, how does the treasury stock method differ from the if-converted method? Discuss 3 pros and 3 cons of offering stock options as compensation to employees.

How is basic EPS different from diluted EPS? When calculating diluted EPS, how does the treasury stock method differ from the if-converted method? Discuss 3 pros and 3 cons of offering stock options as compensation to employees.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 3Q: What is the difference between a stock dividend and a stock split? As a stockholder, would you...

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When we compute the diluted earnings per share, under the treasury stock method for stock options, if the exercise price of the options exceeds the average market price, then: (Enter 1, 2, 3, or 4 that represents the correct answer.) we present both diluted earnings per share and basic earnings per share. we present only diluted earnings per share, but not basic earnings per share. the number of shares assumed issued will be greater than the number of shares assumed reacquired. the number of shares assumed issued will be smaller than the number of shares assumed reacquired.
Which of the following correctly ranks the costs of debt (rd), preferred stock (rp), retained earnings (rs), and new common stock (re)? Question 10 options: rd < rp < rs < re rd > rp > rs > re rp < rs < re < rd rp < rs < rd < re
Answer the multiple-choice question below: 1. Which of the following is/are incorrect about the characteristics of preferred stock: I.It has a fixed maturity date II.Dividends are tax-deductible III.Dividend payments vary just like common stock IV.Can be easily converted to a number of common stock Select one: a. I and II only b. I only c. I, II, and III only d. All of the above
Analyzing EPS Match each term, 1 through 12 with its impact on the EPS calculation. Assume a simple capital structure unless the scenario indicates otherwise. Ignore the possibility of antidilutive securities and the initial impact on net income of a particular transaction. A scenario may have more than one impact on the EPS calculation. Scenario 1. Noncumulative, 7% preferred stock dividend with no dividend declaration. 2. Cumulative, 7% preferred stock dividend with no dividend declaration. 3. Issuance of stock options. 4. Retirement of common shares. 5. Stock dividend declared during the year. 6. Stock dividend declared after the calender year but before financial statements are issued. 7. Stock split. 8. Issuance of convertible noncumulative preferred stock with no dividend declaration. 9. Issuance of convertible bonds. 10. Conditions for issuance are met for unisssued contingent shares. 11. Purchase of shares for the treasury. 12. Granting of…
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When calculating diluted EPS, which of the following, if dilutive, would cause the weighted average number of shares to increase? Select one: a. Dividends on preferred stock: Yes; Stock options: No b. Dividends on preferred stock: No; Stock options: Yes c. Dividends on preferred stock: Yes; Stock options: Yes d. Dividends on preferred stock: No; Stock options: No
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Which of the following transactions would most likely affect shareholders’ equity? Group of answer choices Retirement of treasury shares Retirement of ordinary shares None of the choices Declaration of a large bonus issue Expiration of stock rights
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28 When treasury shares are purchased for more than the par value of the shares and the cost method is used to account for treasury shares, what account(s) should be debited? Group of answer choices share premium for the purchase price. Treasury shares for the purchase price. Treasury shares for the par value and retained earnings for the excess of the purchase price over the par value. Treasury shares for the par value and share premium for the excess of the purchase price over the par value.