ABC Company earns a net profit of $500,000, and has $7,000,000 common shares outstanding that sell on the open market for an average of $18 per share. In addition, there are 550,000 options outstanding that can be converted to XYZ Company’s common stock at $17 each.
Please provide the clear calculation on each question and brief explanation with your analysis.
[1] Calculate ABC Company Earning per share (EPS)
[2] Calculate the number of shares that would have been issued at the market price.
[3] Calculate the shares have been purchased with the proceeds from the options
[4] Calculate the number of shares that could have been purchased from the number of options exercised.
[5] Calculate the incremental number of share to the shares already outstanding.
[6] Calculate the Diluted Earnings per share.