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For each of the following unrelated situations described, indicate whether the securities described would cause a dilutive or anti-dilutive effect when calculating for EPS in
For each of the following unrelated situations described, indicate whether the securities described would cause a dilutive or anti-dilutive effect when calculating for EPS in a complex structure given the following company facts:
ABC Companys net income was $150,000 in 2022. The weighted average number of common shares outstanding in 2022 was 40,000 while the average stock price for 2022 was $33. The income tax rate in 2022 was 25%.
- The companys equity included 10,000 shares of 7.7% of $100 par convertible, cumulative preferred stock. Each share is convertible into two common shares.
- 6.4% convertible 10-year, $500,000 Bonds (issued at face value). The bonds can be converted into 5,000 common shares.
- Stock options were exercisable at $30 per share after January 1, 2024.
- Warrants for 1,000 common stock with an exercise price of $35 per share.
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