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Calculating Earnings per Share Little, Inc., reported earnings of $160,000 for 2013, and at the end of the year, had the following securities outstanding: 60,000

Calculating Earnings per Share Little, Inc., reported earnings of $160,000 for 2013, and at the end of the year, had the following securities outstanding:

  1. 60,000 shares of common stock. (The year-end share price was $25 per share).
  2. Employee stock options for the purchase of 8,000 common shares at an exercise price of $22 per share. (The options are fully vested).

(a) Calculate the basic earnings per share for Little, Inc. for 2013. Round to two decimal places. $Answer

(b) Calculate the diluted earnings per share for Little, Inc. for 2013. Round to two decimal places. Hint - Do not consider the effect of the treasury stock buyback as this technical issue is not covered in the chapter. $Answer

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