Flashcards in Earnings Per Share Deck (22)

1

## What are the two basic measures of EPS?

### Basic EPS and Diluted EPS

2

## Basic EPS =

### (NI - P Stock Divs) / WA shares of common stock outstanding

3

## Common stock dividends effect EPS. TF

### False

4

## Diluted EPS is always going to be lower the Basic EPS. TF

### True, because it includes more in the denominator

5

## Diluted EPS =

### (NI - P Stock Divs + Adj to Income for assumed conversion of potential common stock) / (WA of C Stock outstanding for period + Shares from assumed conversion of potential common stock)

6

## BEPS and DEPS are shown on the face of the income statement for...

### Income from continuing operations and NI

7

## In calculation BEPS, only upon payment are PS divs subtracted from the numerator when the divs are cumulative. TF

### False, one FULL YEAR (share x % x par) of cumulative PSDs are subtracted regardless of amount declared or paid.

8

## Declared PSDs are subtracted from the BEPS numerator. TF

### True

9

## In calculation of BEPS, when dealing with cumulative PSDs only the declared portion in that CURRENT YEAR is subtracted from the numerator. TF

### True

10

## Stock divs AND stock splits are shown prospectively in regards to BEPS calculations. TF

### False, you must RETROACTIVELY show the impact of the splits on BEPS for all periods shown

11

## When calculating the WA shares outstanding (denominator BEPS), 300 shares issued on Jul 1 would equal how many shares?

### 300 x (6/12) = 150 Weighted Average Shares.

12

## Regarding BEPS, if PSDs are cumulative always subtract, if not cumulative, subtract only what was declared. TF

### True

13

## Diluted EPS is an "as if " calculation to see if the impact on EPS "if" ___________?

### All potential conversions of stock were converted.

14

## In comupation of DEPS, BEPS will not need to be computed. TF

### False, BEPS is computed first, then changes in the numerator and denominator for assumed conversion and exercise of potential common stock.

15

## Stock dividends are computed into the WA calculation as of the date declared. TF

### False, they are outstanding as of the beginning of the year (the whole amount)

16

## Options, rights, and warrants have no numerator effect on DEPS. TF

### True

17

## The treasury stock method is used for which types of PCSs?

### Options, rights, and warrants

18

## The formula (Number of options x exercise price = Proceeds from exercise / avg mkt price of stock = shares reacquired from proceeds - shares reacquired) refers to what?

### The treasury stock method for computing DEPS

19

## Options, rights, and warrants are dilutive when the exercise price exceeds the market price. TF

### False, market price > exercise price to be considered dilutive

20

## Under IFRS, there is NO EPS for extraordinary items (ex items do not exist under IFRS), dilution is computed each period, and EPS on alternative measures is also computed. TF

### True

21

## IFRS is more or less descriptive when disclosing debt and equity.

### More

22