AuthorTopic: Questions for shares outstanding
davsclaus
@2005-04-27 14:06:42
Bluff, Inc.?s stock transactions during the year 2001 were as follows:
? January 1 90,000 common shares outstanding.
? April 1 20 percent stock dividend is declared and issued.
? October 1 10,000 shares are reacquired as treasury stock.

When computing for earnings per share (EPS) computation purposes, what is Bluff?s weighted average number of shares outstanding during 2001?
A) 98,000.
B) 101,000.
C) 105,500.
D) 103,333.

Which you would pick for right ?
alruiz15
@2005-04-28 04:47:29
90k x 1.2 =108k shares til Oct 1st; then minus 10k = 98k shares til year end. Therefore average for year is .75 x 108k + .25 x 98k = 105.5k

1.2 is multiple for stock dividend (essentially applied from beginning of year for calcs.)
.75 is for first 9 months
.25 is for last 3 months
then weighted average
minus 10k = treasury stock retired

davsclaus
@2005-04-28 17:48:27
Thanks. One more question for the stock dividend.

In this case, 20% stock dividend is declared and issued on April 1. But in the above answer, you assume that 90,000X(1+20%) is outstanding since the beginning of this year. Could I conclude that the dividend issued date is nothing to do with the calculation of weight outstanding share.