Question
The 2016 Form 10-K of Netflix includes the following footnote information. Use this information to answer the required. The computation of net income per share
The 2016 Form 10-K of Netflix includes the following footnote information. Use this information to answer the required. The computation of net income per share is as follows: Year ended December 31, (in thousands, except per share data)
2016 | 2015 | 2014 | |
Basic earnings per share: | |||
Net Income | $186,678 | $122,641 | $266,799 |
Shares used in computation: | |||
Weighted- average common shares outstanding | 428,822 | 425,889 | 420,544 |
Diluted earnings per share: | |||
Net income | $186,678 | $122,641 | $266,799 |
Shares used in computation: | |||
Weighted-average common shares outstanding | 428,822 | 425,889 | 420,544 |
Employee stock options | 9,830 | 10,567 | 11,350 |
Weighted-average number of shares | 438,652 | 436,456 | 431,894 |
Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential common shares excluded from the diluted calculation (in thousands):
Year ended December 31, | 2016 | 2015 | 2014 |
Employee stock options | 1,545 | 517 | 917 |
Required: a. What are the potential sources of dilution on Netflix's earnings per share? b. List an additional dilutive security (other than those Netflix includes). c. Netflix did not include all outstanding employee stock options in the calculation of diluted net income per share in 2016. Why not? How many options were excluded? d. Calculate basic EPS for each of the three years (round to the nearest whole cent)
2016 | 2015 | 2014 | |
Basic EPS |
e. Calculate diluted EPS for each of the three years ( round to the nearest whole cent)
2016 | 2015 | 2014 | |
Diluted EPS |
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