CFA Practice Question

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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?

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^
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