Problem D-VI - Basic and Diluted Earnings Per Share
Assume that the following data relate to Rosen, Inc. for the year 2015:
Net income (30% tax rate) $3,500,000
Average common shares outstanding 2015 1,000,000 shares
10% cumulative convertible preferred stock:
Convertible into 80,000 shares of common $1,600,000
8% convertible bonds; convertible into 75,000
shares of common $2,500,000
Stock options:
Exercisable at the option price of $25 per share;
average market price in 2015, $30 84,000 shares
Instructions
Compute (a) basic earnings per share, and (b) diluted earnings per share.