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Basic Question 13 of 40
When computing the weighted average number of shares outstanding during the year, which of the following is a mid-year event that must be treated as occurring at the beginning of the year?
B. Issuance of stock warrants
C. Sale of additional common stock
D. Declaration and payment of a stock dividend
A. Purchase of treasury stock
B. Issuance of stock warrants
C. Sale of additional common stock
D. Declaration and payment of a stock dividend
User Contributed Comments 4
| User | Comment |
|---|---|
| Saxonomy | Calculation-wise, A and B both involve realizing a decrease in outstanding shares, followed by a weighted average calculation. Right? Also, since warrants are usually only offered as "decorations" to make bigger deals more marketable or attractive, can we assume issuing warrants will not change the numerator (i.e. net income) because very few people actually pay $$$ to buy warrants? Thanks for your inputs. |
| gulfa99 | A is dillutive so inclusive in the weighted average. Stock Warrants are dillutive if they are exercised otherwise treat it as non dillutive |
| johntan1979 | Splits and reverse splits as well - beginning of year regardless of when declared. |
| Seancfa1 | Thank-you Johntan1979 |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
describe how earnings per share is calculated and calculate and interpret a company's basic and diluted earnings per share for companies with simple and complex capital structures including those with antidilutive securities
CFA® 2024 Level I Curriculum, Volume 2, Module 2.