Common Stock..... $13 Stock Warrants. $4.5 Treasury bills interest rate at 12/31/Year 1. Required: a. Calculate and show computations for basic and diluted earnings per share figures for common stock for the Year 1 annual report (assume a 50%% tax rate). b. What is the times-interest-earned ratio for Year 2 assuming net income before interest and taxes is the same as in Year 1 (a 50% income tax rate applies)? Step-by-step solution Step 1 of 4 Earnings Per Share (EPS): EPS is calculated by dividing earnings available to the equity shareholders by total outstanding share as on the date. It denotes the net earnings available to equity shareholders per shares. In simple capital structure it contains only common stock and does not contains potential common stock which could result in dilutive EPS upon conversion into equity shares. EPS is calculated only for common stock by deducting preferred dividend from the net earnings available to the equity shareholders. EPS is not reported for the preference shareholders. Preference dividend is calculated separately for preference shareholders