Question
Oriole Corporation had net income for the current fiscal year of $600,000, and common shares outstanding of 96,000. There were no changes to Orioles common
Oriole Corporation had net income for the current fiscal year of $600,000, and common shares outstanding of 96,000. There were no changes to Orioles common shares during the year. Oriole also had outstanding a $1,000,000, 9% bond sold in a previous year that was convertible to 66,000 common shares. In addition, Oriole sold a new bond on October 1 of the current year. The new bond was a $1,000,000, 11% bond, convertible to 60,400 shares. Oriole was subject to a tax rate of 22%. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately).
Calculate Orioles basic earnings per share. (Round answer to 2 decimal places, e.g. 15.25.)
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Calculate the after-tax interest paid on the 9% bonds.
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Determine an incremental per share effect for 9% bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.)
Potentially dilutive security | Incremental Numerator Effect | Incremental Denominator Effect | EPS | |||
9% Bonds | $ | $ |
Calculate the after-tax interest paid on the 11% bonds.
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Determine an incremental per share effect for 11% bonds. (Round earnings per share to 3 decimal places, e.g. 15.257.)
Potentially dilutive security | Incremental Numerator Effect | Incremental Denominator Effect | EPS | |||
11% Bonds | $ | $ |
Rank the potentially dilutive securities from most dilutive to least dilutive.
9% bonds | Rank 1Rank 2Anti-dilutive | |
11% bonds | Rank 1Rank 2Anti-dilutive |
Calculate Orioles diluted earnings per share. (Round calculations of EPS to 3 decimal places, e.g. $3.545 and provide final answer to 2 decimal places, e.g. 15.25.)
Numerator | Denominator | EPS | |||||
Basic EPS | $ | $ | |||||
Sub Total | $ | ||||||
$ | $ |
Diluted EPS |
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