CFA CFA Level 1 Diluted EPS

Diluted EPS

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      First, we have to adjust the pre-dividend number of shares to post-dividend number of shares, then weight it:

      1st Jan: 3,000,000 * 1.15 = 3,450,000

      1st March: 100,000 * 1.15 * 9/12 = 86,250

      1st Sep: -125,000 shares (no adjustment need as post stock dividend) * 4/12 = -41,667

      Add them all up, I get 3,494,583 weighted avg number of shares.

      So basic EPS = ($7.5m – $1.3m preferred divs) / 3,494,583 = $1.77

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      Because it is not convertible?

    • Avatar of YeshankYeshank
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        since its nowhere mentioned that they are convertible and also no conversion ratio has been given i would say that you are correct

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        Kaplan’s answer for basic EPS is still correct like mine, $1.77.

        I’m not sure how they arrived at 3,504,167, but I think it is close enough that it didn’t impact the final answer.

      • Avatar of pcunniffpcunniff
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          @Sophie so is Kaplans answer wrong then? They have 3,504,167 vs your number of 3,494,583.

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