# How to calculate earnings per share

## Formula for calculating diluted EPS

Diluted EPS is a measure of profitability and is calculated as the ratio of the company’s income to the number of shares outstanding after taking into account dilutive securities such as convertible debt, preference shares, options and warrants.

Let’s take a look at the diluted earnings per share formula –

For instance:
Source: Diluted EPS Formula (wallstreetmojo. com)

From the diluted earnings per share formula above, you can understand that you need to look at the entire balance sheet and income statement Calculating diluted earnings per share.

### Explanation

There is a difference between basic and diluted earnings per share. Basic earnings per share (EPS) is a determination of the company’s net earnings per share. For example, if the company has a net profit of \$ 100,000 and the company has 10,000 shares outstanding; so earnings per share (EPS) would be = (\$ 100,000 / 10,000) = \$ 10 per share.

However, in this case it is about implementation. In diluted profits per share (DPS), along with the common outstanding shares, we will also consider convertible shares – the shares which have the possibility of turning into the company’s shares.

Therefore, in almost all situations, the DPS would always be lower than the earnings per share (this is the basic math – in the case of DPS the denominator is much larger).

### Example of a diluted earnings per share formula

Let’s take an example of calculating a diluted EPS.

• Net profit: \$ 450,000
• Ordinary shares in circulation: 50,000
• Preferred Stock Dividend: \$ 50,000
• Stock options for defaulting employees: 5,000
• Convertible Preferred Shares: 23,000
• Convertible debt:10,000
• Orders: 2000

Calculate basic earnings per share and DPS

All information is provided in the example above. We will put it in the diluted earnings per share formula.

• First, we will know the earnings per share.
• Basic earnings per share = net income / outstanding equity = \$ 450,000 / 50,000 = \$ 9 per share.

Diluted earnings per share formula = (net profit – preferred dividends) / (ordinary shares outstanding + stock option for unused shares + preferred convertibles + convertible debt + warrants)

• Or, Diluted EPS Formula = (\$450,000 – \$50,000) / (50,000 + 5000 + 23,000 +10,000 + 2000)
• Or DPS = \$ 400,000 / \$ 90,000 = \$ 4.44 per share.

### Use of diluted EPS

If you look at the financial statements, you may not get information on diluted earnings per share. You need to look at your notes with your financial statements to get an idea of ​​the diluted earnings per share.

Using the diluted EPS formula helps investors know what earnings per share would be if all or some of the convertible securities were converted into company shares.

As an investor, you need to consider both – earnings per share and diluted earnings per share – to have a holistic view of earnings per share.

### Diluted EPS calculator

You can use the following Diluted EPS calculator

 Net income Preferred stock dividends Ordinary shares in circulation Stock options for defaulting employees Convertible Preferred Stock Convertible debt Orders Diluted earnings per share formula =

### Calculate diluted earnings per share in Excel (with Excel template)

Now let’s do the same example above in Excel.

It is very easy. You need to provide the two inputs of Net income and Ordinary shares in circulation.

The diluted EPS calculation can be easily done in the template provided.

First, we will know the earnings per share.

Here is the formula for calculating diluted EPS

Diluted EPS Formula = (Net income – Preferred stock dividends) / (Ordinary shares in circulation + Unexercised Employee Stock Options + Convertible Preferred Stock + Convertible debt + Orders)

### Recommended articles:

This was the guide to the Diluted EPS Formula. Here we discuss how to calculate diluted earnings per share along with practical examples and downloadable excel templates. You can also check out the articles below to learn more about financial analysis –

Home »Accounting Dictionary» What is Basic Earnings Per Share?

Definition: Basic earnings per share is a financial measure that measures the net income earned or available for each common shareholder. Basic earnings per share are often referred to as earnings per share, EPS and net earnings per share.

## What does basic EPS mean?

Basic earnings per share are calculated by subtracting preferred dividends from net profit and dividing them by the average number of ordinary shares outstanding during the year.

Preferred dividends must be deducted from your net income as this money is not available to ordinary shareholders. Preferred shareholders are often entitled to dividends before ordinary shareholders, so this money must go to preferred shareholders. Preferred shares can be issued as non-cumulative and cumulative preferred shares. In the event of the issue of non-cumulative preference shares, only the actually declared preference dividends must be subtracted from the net profit.

Cumulative preferred stock is more inclusive. In the event of a stacked preferred stock issue, all preferred dividends, whether declared or not, must be deducted from net income to determine the profit available to ordinary shareholders.

The weighted average method calculates the number of ordinary shares outstanding during the year. The weighted average method for calculating outstanding ordinary shares is the same commonly used for the conversion and valuation of inventories.

## Example

Ad esempio, supponiamo che Big Bad Band, Inc. has net income for the year of \$\$2,000,000, declares a \$10,000 dividend on its noncumulative preferred stock, and has10,000 common shares outstanding. Here’s what Big Bad Band, Inc’s basic earnings per share would look like.

Jean Folger has over 15 years of experience as a financial writer covering real estate, investing, active trading, economics and retirement planning. She is the co-founder of PowerZone Trading, a company that has been providing programming, consulting and strategy development services for active traders and investors since 2004.

Earnings per share (EPS) is calculated by determining the company’s net profit and assigning it to each ordinary share issued.

### Key takeaway

• Earnings per share (EPS) is the fraction of the company’s profit attributable to each ordinary share issued.
• EPS (for companies with preferred and ordinary shares) = (net profit – preferred dividends) ÷ average of the ordinary shares issued
• EPS is sometimes referred to as the end resulta final statement, literally and figuratively, about goodwill.

## Importance of earnings per share (EPS)

EPS is a measure that can be used as an indicator of a company’s financial health. If all profits of the company were paid to its shareholders, EPS is the portion of the company’s net profit that would be allocated to each share issued.

EPS is typically used by analysts and traders to assess a company’s financial strength. It is often considered one of the most important variables in determining the value of a stock. Many investors still use EPS as a measure of a company’s profitability. In fact, it is sometimes referred to as the end resulta final statement, literally and figuratively, about goodwill.

A higher EPS means that the company is profitable enough to pay more money to its shareholders. For example, a company may increase its dividend as profits increase over time.

Investors typically compare the EPS of two companies in the same industry to get an idea of ​​how the company performs compared to other companies. Investors can also look at EPS growth trends to get a better idea of ​​how profitable the company has been in the past and what its future prospects are. A company with a steadily increasing EPS is considered a more reliable investment than a company whose EPS is decreasing or changing significantly.

EPS is also an important variable in determining the value of a stock. This measure is part of the earnings portion of the Price-Earnings (P / E) valuation ratio. The P / E ratio is one of the most common indicators used by investors to determine whether a company’s stock price is properly valued in relation to its earnings.

## Calculation of earnings per share

EPS is calculated as follows:

For example, assume Bank of America (BAC) net profit for fiscal 2017. Its net profit was \$ 18.232 billion. Preferred dividends on the shares were \$ 1.614 billion. The average number of ordinary shares in circulation was 10,196 billion. This puts its EPS on:

Diluted EPS, including the effect of convertible preferred stock, options, warrants and other dilutive securities, was \$ 1.56.

Companies can decide to buy back their shares on the open market. In fact, Bank of America actually did this in 2017. By doing this, a company can improve its EPS (because there are fewer shares outstanding) without actually improving its net profit. In other words, your net income is divided by fewer shares, thus increasing your EPS.

To simplify the example, let’s assume that Bank of America bought 1 billion shares in 2017 as part of a share buyback program. His EPS would be:

You will notice that the example above uses averages for the outstanding stocks in the formula. An average is typically used because companies can issue or repurchase stocks all year round, making it difficult to pinpoint the true EPS. Since the number of shares can vary frequently, using the average of the shares traded gives a more accurate picture of the company’s earnings.

However, not all companies have preferred stocks. Some offer only common stock. The formula for calculating EPS would then simply be the following:

There are many different indicators that can be used to gauge a company’s profitability. The company’s current and future profitability is an important knowledge for current shareholders and potential investors. One of the most useful measures of a company’s financial strength and stock value is earnings per share. In this article, you define earnings per share, how to calculate earnings per share, and how knowing what it means can help you make better investment decisions.

## What is earnings per share?

Earnings per share (EPS) is the fraction of a company’s net income that would have been earned per share if all earnings had been paid to shareholders. EPS says a lot about the company, including the company’s current and future profitability. EPS can be easily calculated from basic financial information that can be found on the Internet.

## How to calculate earnings per share (with examples)

There are two ways to calculate earnings per share: using the basic earnings per share equation or the weighted earnings per share equation. Here are the steps to calculate both:

• Steps to calculate basic earnings per share
• Steps for calculating weighted earnings per share

### Steps to calculate basic earnings per share

1. Determine the company’s net profit from the previous year.
2. Specify the number of shares outstanding.
3. Divide your net income by the number of shares outstanding.

#### 1. Determine the company’s net income from the previous year

Usare il tuo reddito netto o i guadagni della tua azienda come cifra di base è il modo più semplice per determinare il tuo EPS. This information is usually found on their website or financial page. Be careful not to confuse your quarterly and annual net income.

#### 2. Specify the number of shares outstanding

Shares Outstanding is the number of shares the company holds on the stock exchange. The financial parties should make this information publicly available.

#### 3. Divide your net income by the number of shares outstanding

To determine the basic earnings per share, it is sufficient to divide the total annual net profit of the last year by the total number of shares in circulation.

Here is an example of a basic EPS calculation:

Net income firmy od 2019 r. wynosi 5 billionów dolarów i ma w obrocie 1 billion akcji.

Basic earnings per share = (5 billion / 1 billion)

### Steps for calculating weighted earnings per share

Weighted earnings per share is a more accurate calculation of EPS since it takes into account the dividends, also known as preferred stock, that a company issues to its shareholders. A dividend is the amount that a company pays its shareholders as a profit, usually on a quarterly basis. Here’s how to calculate it:

1. Determine the company’s dividend on preferred stock.
2. Subtract the company’s dividends from its annual net income.
3. Divide the difference by the average number of shares outstanding.

#### 1. Determine the company’s dividend on preferred stock

This information is usually available on the company’s website or financial page.

#### 2. Subtract the company’s dividends from its annual net income

Since companies pay these dividends to shareholders during the year, they cannot be included in the annual net profit.

#### 3. Divide the difference by the average number of shares outstanding

Similarly to the calculation of the basic earnings per share, the number of shares is subtracted from the annual net profit (excluding dividends).

Here is an example of how to calculate a weighted EPS:

Net income firmy od 2019 r. wynosi 15 billionów dolarów, w ciągu roku wypłacają 2 billiony dywidendy akcjonariuszom i mają w obrocie 4 billiony akcji.

Weighted earnings per share = (15 billion – 2 billion) / 4 billion

Weighted EPS = 13 billion / 4 billion

Weighted EPS = 3.25

## How to interpret the results

EPS is important in terms of profitability, performance and goodwill, which are important information for you as an investor. Here’s how to interpret the EPS results:

• A higher EPS means a higher payout.
• Use EPS to compare companies.
• Use EPS growth trends to predict future profitability.
• Use EPS to determine inventory value.

### A higher EPS means a higher payout

More EPS means the company is more profitable and can pay more money to you as a shareholder. However, please note that no fixed numbers you specify indicate that you should buy or sell a stock. It is suggested to always look at the company’s EPS compared to similar companies.

### Use EPS to compare companies

Comparing the EPS of companies in the same industry will help you make smarter investments by seeing how your company performs compared to others. Also consider other factors when making investment decisions, such as:

• Stock price
• Number of dividends
• Publicly traded goodwill (also known as market capitalization)
• Liquidity (how easily a company’s assets can be converted into cash)

### Use EPS growth trends to predict future profitability

A company with a steadily increasing EPS is considered a more reliable investment than a company with a falling or unpredictable EPS. L’analisi di un’azienda per azione ti aiuta a monitorare le sue prestazioni nel tempo e a prendere decisioni di investimento informate.

### Use EPS to determine inventory value

A company’s price-to-earnings ratio helps determine if the stock price is correct. EPS offers the earnings information you need to compare price versus earnings. By dividing the share price by the earnings per share, you can determine whether a company is expensive or fairly valued compared to similar companies in its industry.

## Types of earnings per share

There are three types of EPS, depending on where the numbers come from:

• Final EPS
• Current EPS

### Final EPS

Final EPS is based on numbers from the previous year. This calculation uses earnings from the previous four quarters to calculate earnings per share. Most stock market values ​​use mobile EPS because it uses real data. Investors may not, however, look too closely at mobile EPS as it does not forecast future EPS data.

### Current EPS

Current EPS is based on numbers from the current year, which include projections. This calculation uses data from the four quarters of the current fiscal year. Some quarters have already passed providing final data, while some quarters remain forecasts.

Upload EPS is based on the future, projected numbers. Analysts or the company itself often make predictions for investors who want to know the company’s earning potential.

Many investors compare all three types of EPS to make smarter investment decisions.

Howard Kingsnorth / Getty Images

If you want to compare the shares of different public companies, it is useful to know how to calculate the measure known as earnings per share (EPS). This tool helps traders overcome the challenge of valuing stocks with a true “apple to apple” comparison. Firm EPS is designed to provide a more concrete way to compare firms and to help investors make more informed investment decisions.

## Why analysts care about earnings per share

Just comparing the price of two shares means nothing. Each share gives the investor a small stake in the company, but the share price does not indicate how many shares in the company the investor is buying.

Dwie firmy mogą obie oferować akcje po 10 USD, ale firma A jest warta tylko 10,000 USD, a firma B jest warta 100,000 USD. W takim przypadku akcje Spółki A dają Ci 10% wyższy udział w spółce, ponieważ istnieje tylko 1000 akcji (łączna wartość 10,000 USD ÷ 10 USD za akcję). This is also known as a number shares outstanding. At \$10 per share, and with a total valuation of \$100,000, Company B has10,000 shares outstanding.

However, knowing how many companies you own tells you nothing about how well the company is doing. To get an idea of ​​a company’s financial health, analysts often look profits. And like a company’s stock price, the profits figures alone don’t tell investors how the two companies stack up against each other.

For example, let’s say that both Company A and Company B report total profits of \$10,000. Does this mean that both companies are equally valuable to investors? No, they aren’t, and that’s because Company B’s profits are being split up among more investors.

Given both of these data points:analyzing both the number of shares outstanding and a company’s total profits– inwestorzy uzyskują jaśniejszy obraz rzeczywistej wartości akcji. This is known as calculating a company’s profits per share.

## How to calculate earnings per share

The EPS calculation is fairly simple-just take a company’s net profits and divide them by the firm’s outstanding shares. In other words:

EPS = net profits ÷ outstanding shares

Both of these data points are easy to find on any publicly-traded company’s quarterly profits reports. The EPS value is also found in the company’s quarterly report, but it’s important to know how to do the calculations yourself.

You can practice your calculations using the example above. Company A had profits of \$10,000 and 1,000 shares outstanding, which equals an EPS of \$ 10 (10,000 ÷ 1000 = 10 zł). Company B also had profits of \$10,000, but with10,000 shares outstanding, which equals an EPS of 1 (\$10,000 ÷10,000 = \$1).

Therefore, from an EPS perspective, Company A is a more attractive investment opportunity.

## Types of EPS numbers

That’s it for the EPS calculation, but when you see EPS listed on the web or in a business report, it’s important to pay attention to the dataset the analyst is using. Analysts often use three types of EPS numbers, which can help you better compare stocks:

• Final EPSuses last year’s data, making it the only non-speculative EPS.
• The current ENP uses numbers from all four quarters of the current fiscal year, including projections of expected profits and outstanding shares in quarters that haven’t yet happened.
• Move EPSuses future data to predict the company’s expected results in the coming years.

## Don’t just invest in EPS

The EPS helps when comparing one company to another, assuming they are in the same industry, but it doesn’t tell you whether it’s a good stock to buy. Experienced investors check a wide range of information before buying stock, including multiple financial indicators of the company, as well as any news about the company, the industry as a whole, and the stock market in general.

Balance does not provide tax, investment or financial advice or services. Information is presented without taking into account the investment objectives, risk tolerance or financial position of a specific investor and may not be suitable for all investors. Past performance is not indicative of future performance. Investing involves risks, including possible loss of principal.

## What is the earnings per share (EPS) formula?

EPS is a financial ratio Financial Ratios Financial ratios are created with the use of numerical values taken from financial statements to gain meaningful information about a company , which divides net profits Net income Net income is a key line item, not only in the income statement, but in all three core financial statements. While it is arrived at through available to common shareholders by the average outstanding shares weighted average Actions Outstanding Weighted average shares outstanding refers to the number of shares of a company calculated after adjusting for changes in the share capital over a reporting period. The number of weighted average shares outstanding is used in calculating metrics such as Earnings per Share (EPS) on a company’s financial statements over a certain period of time. The EPS formula indicates a company’s ability to produce net profits for common shareholders. This guide details the earnings per share formula.

A single EPS for a company is somewhat arbitrary. The number is more valuable when analyzed against other companies in the industry, and when compared to the company’s share price (the P/E Ratio Price Earnings Ratio The Price Earnings Ratio (P/E Ratio is the relationship between a company’s stock price and profits per share. It provides a better sense of the value of a company. ). Between two companies in the same industry with the same number of shares outstanding, higher EPS indicates better profitability. EPS is typically used in conjunction with a company’s share price to determine whether it is relatively “cheap” (low P/E ratio) or “expensive” (high P/E ratio).

### Earnings per share formula

There are several ways to calculate profits per share.

Below are two versions of the profits per share formula:

.EPS = (Net income – Preferred Dividends) / End of period Actions Outstanding

EPS = (Net income – Preferred Dividends) / weighted average Actions Outstanding

The first formula uses total outstanding shares to calculate EPS, but in practice, analysts may use the weighted average shares outstanding weighted average Actions Outstanding Weighted average shares outstanding refers to the number of shares of a company calculated after adjusting for changes in the share capital over a reporting period. The number of weighted average shares outstanding is used in calculating metrics such as Earnings per Share (EPS) on a company’s financial statements when calculating the denominator. Since outstanding shares can change over time, analysts often use last period shares outstanding.

A diluted ENP is also often mentioned in the financial statements. Diluted EPS Quote Free quote guides to learn the most important concepts at your own pace. These articles will teach you business valuation best practices and how to value a company using comparable company analysis, discounted cash flow (DCF) modeling, and precedent transactions, as used in investment banking, equity research, includes options, convertible securities, and warrants outstanding that can affect total shares outstanding when exercised.

Another type of profits per share formula is adjusted EPS Normalized EPS Normalized EPS refers to adjustments made to the income statement to reflect the up and down cycles of the economy. . This removes all non-essential gains and losses, as well as those relating to minority interests. The focus of this calculation is to see only profit Profit Profit is the value remaining after a company’s expenses have been paid. It can be found in the income statement. Whether the remaining value or the loss generated by basic operations on a normalized value.

### Earnings Per Share Formula Example

ABC Ltd has a net profit of \$ 1 million in the third quarter. The company announces a dividend of \$ 250,000. Total shares outstanding is at 11,000,000.

EPS ABC Ltd. would be:

.EPS = (\$ 1,000,000 – \$ 250,000) / 11,000,000
EPS = \$ 0.068

Since each stock receives an equal slice of the net profit pie, each will receive \$ 0.068.

### Earnings per share formula Template

As you can see in the Excel screenshot below, if ABC Ltd has a net income of \$1 million, dividends of \$0.25 million, and shares outstanding of 11 million, the profits per share formula is (\$1 – \$0.25) / 11 = \$0.07.

Keep in mind that many companies do not have senior stock and for these companies there are no senior dividends to deduct. The reason preferred dividends are deducted is that EPS represents only the profits available to Ordinary shareholders and preferred dividends must be paid before anything is received by the ordinary shareholders.

Claire Boyte-White is the lead writer of NapkinFinance. com, co-author of I Am Net Worthy and co-founder of Investopedia. Claire’s expertise lies in corporate finance & accounting, mutual funds, retirement planning, and technical analysis.

The profits per share (EPS) ratio is an important metric used by analysts and traders to establish the financial strength of a company. Zasadniczo wskaźnik EPS wskazuje, jaka część dochodu netto firmy zostałaby zarobiona na akcję, gdyby wszystkie profits zostały wypłacone akcjonariuszom.

## Definition of earnings per share

Chociaż bardziej prawdopodobne jest, że firma reinwestuje swoje profits w rozwój firmy, inwestorzy nadal oczekują EPS, aby ocenić rentowność firmy. Wyższy wskaźnik oznacza, że ​​..firma jest na tyle rentowna, że ​​..może wypłacać duże sumy swoim akcjonariuszom. Typically, investors look at a company’s EPS index which changes over time relative to others in the same industry. Setting trends in EPS growth gives you a better idea of ​​how profitable your business has been in the past and could be in the future. A company with a steadily increasing EPS is considered a more reliable investment than a company whose EPS is decreasing or changing significantly.

Calculating the EPS ratio requires only three data points: net income, preferred stock dividends and number of common shares outstanding. The total amount of preferred stock dividends is subtracted from the net income and the result is divided by the number of common shares outstanding. Note that this equation distinguishes between common and preferred stocks. This is because preferred stock generates a fixed percentage of the dividend that must be paid before the common stock dividend is paid. (For related reading, see “Preferred Stock Support.”)

## Calculation of profit per share ratio in Excel

Many online financial spreadsheet templates calculate EPS and other financial ratios. The EPS indicator is also often found on stock market websites because it is so widely used in investment analysis. However, companies typically calculate and publish the EPS ratio at the end of the fiscal year using a weighted average for the number of common shares outstanding. This is because companies typically sell and buy back stock throughout the year, so the number of shares outstanding varies from day to day. For more up-to-date data, the company’s current EPS can be easily calculated using Microsoft Excel.

After collecting the necessary data, input the net income, preferred dividends and number of common shares outstanding into three adjacent cells, say B3 through B5. In cell B6, enter the formula “= B3-B4” to subtract preferred dividends from your net income. In cell B7, enter the formula “= B6 / B5” to make the EPS ratio.

## A Brief Example of the Earnings Per Share Ratio

Dan wants to make sure he diversifies his investments sufficiently as he plans to retire, so he starts researching stocks that appear to have growth potential. After studying XYZ closely, Dan wants to see how his EPS compares to peers in the industry before moving on. His research shows XYZ has a net income of \$5 million, preferred share dividends of \$1.5 million and 700,000 total common shares outstanding. Korzystając z programu Excel, Dan oblicza, że ​​..XYZ ma wskaźnik EPS na poziomie 5 USD. Ponieważ wskaźnik ten stale rośnie w ostatnich latach i wypada korzystnie w porównaniu z innymi w branży, Dan uważa, że ​​..XYZ to dobra inwestycja.

Accounting CPE Courses & Books

## What is the Basic Earnings per share formula?

Basic profits per share is the amount of a company’s profits allocable to each share of its common stock. It is a useful measure of performance for companies with a simplified capital structure. If a business only has common stock in its capital structure, the company presents only its basic profits per share for income from continuing operations and net income. Queste informazioni sono incluse nel conto profits e perdite. If there are situations under which more shares might be issued, such as when stock options are outstanding, then diluted profits per share must also be reported. As the name implies, diluted profits per share present the lowest possible profits per share, based on assumptions that all possible shares are issued.

The formula for basic profits per share is:

Profit or loss attributable to the ordinary shareholders of the parent company ÷
Weighted average number of common shares outstanding during the period

In addition, these calculations should be divided into:

Profit or loss on continuing operations attributable to the parent company

Total profit or loss attributable to the parent company

When calculating basic profits per share, incorporate into the numerator an adjustment for dividends. Subtract from the profit or loss the after-tax amount of any dividends declared on non-cumulative preferred shares and the after-tax amount of any preferred dividends, even if no dividends have been declared; it does not include dividends paid or declared in the current year that refer to previous years.

Also, you should incorporate the following adjustments into the denominator of the basic profits per share calculation:

Contingent inventories. If there are shares issued on a contingent basis, they should be treated as if they were in circulation on a date in which there are no circumstances in which the shares would not have been issued.

Weighted average stocks. Use the weighted average number of shares over the period in the denominator. You do this by adjusting the number of shares outstanding at the beginning of the reporting period for common shares repurchased or issued in the period. The adjustment is based on the proportion of days during the reference period that the shares remain outstanding.

## Example of Basic Earnings per Share

Lowry Locomotion makes a profit of \$ 1,000,000 excluding tax in its first year. Additionally, Lowry owes \$ 200,000 in dividends to the holders of his accumulated preferred stock. Lowry calculates the numerator of its basic profits per share as follows:

\$ 1,000,000 profit – \$ 200,000 dividend = \$ 800,000

Lowry had 4,000,000 common shares outstanding at the beginning of Year 1. In addition, it sold 200,000 shares on April 1st and 400,000 shares on 1st October. On 1 July it also issued 500,000 shares to the owners of a newly acquired subsidiary. Finally, on 1 December it repurchased 60,000 shares. Lowry calculates the weighted-average number of common shares outstanding as follows:

 Date Actions Weighing (months) weighted average January 1st 4,000,000 12/12 4,000,000 April 1st 200,000 9/12 150,000 July 1 500,000 6/12 250,000 1st October 400,000 3/12 100,000 December 1 -60,000 1/12 -5000 4,495,000

Lowry’s basic profits per share is:

\$800,000 adjusted profits ÷ 4,495,000 weighted-average shares = \$0.18 per share

Published
Categorized as Interior