- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 5. Earnings per Share
CFA Practice Question
Robinson Company had 1 million shares outstanding at the beginning of the year. On April 1, Robinson issued an additional 300,000 shares. On July 1, Robinson issued 200,000 more shares. What is Robinson's weighted average number of shares outstanding for the calculation of earnings per share?
B. 1,200,000 shares
C. 1,325,000 shares
A. 1,000,000 shares
B. 1,200,000 shares
C. 1,325,000 shares
Correct Answer: C
Weighted average shares = 1,000,000 + (0.75) 300,000 + (0.5) 200,000 = 1,325,000 shares
User Contributed Comments 7
| User | Comment |
|---|---|
| TammTamm | Why are they using 9 months for shares acquired on April 1st? |
| RCapistrano | Since the additional shares were issued in the beginning of April, we count that month too. So from 4 to 12 = 9 months. If the shares were issued at the end of April, then we don't count April. |
| DonAnd | Jan1-Apr1: 1mil x 3/12 = 250,000 Apr1-Jul1: 1.3mil x 3/12 = 325,000 Jul1-Dec30: 1.5mil x 6/12 = 750,000 Weighted Avg Shares O/S = 250,000+325,000+750,000 = 1,325,000 |
| schweitzdm | I borrowed Gill's method from the previous question to this and it worked out to the same answer. |
| praj24 | ^^ Gill's method, really easy to grasp! |
| farhan92 | use your fingers for the months! |
| farhan92 | just revisted this and i stand by that comment^ |