CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Sugarland Corporation had 200,000 common shares outstanding on January 1, 2015. They issued 30,000 additional shares on 4/1/2015 and 12,000 shares on 12/1/2015. What is the weighted average number of shares for the basic EPS computation at the end of 2015?

A. 200,000 shares
B. 222,500 shares
C. 223,500 shares
Correct Answer: C

The computation is (200,000 x 3/12) + (230,000 x 8/12) + (242,000 x 1/12) = 223,500 shares.

User Contributed Comments 20

User Comment
examinee It should be 230000 * 9/12. However, the answer is correct.
Nancyz No, it should be 230,000 * 8/12. the explanation was correct. 8 months between the two issuance.
synner 200,000 * 12/12 + 30,000 * 9/12 + 12,000 * 1/12 = 223500
cwrolfe HP12C
f clear reg
200000 enter 3 Sigma+
230000 enter 8 Sigma+
242000 enter 1 Sigma+
g xw (#6 key)
=223,500
tonytt Isn't it 24 months from Jan 1,2000 to end of year 2011?
nagri Since there's no change so we should assume that the number of shares was still the same at the beginning of 2011.
steved333 yes, synner's explanation is the best. the original 200k were there for the whole year, the next 30k were there for 9 months of the year, and the final 12k were there for only one month. the analyst notes explanation is right (as you can see, the 245k includes the 230k+12k), but it's more confusing.
TammTamm cwrolfe, your explanation for the HP12C is great. Thanks.
rfvo 200,000 * 12/12 + 30,000 * 9/12 + 12,000 * 1/12 = 223500

Agreed!! N1
gazelle But could you explain why 200000 enter 3 Sigma+ and why 230000 enter 8 Sigma+ please? Many thx
viannie gazelle, that's the HP12c way to calculate weighted average. It's computed so we just key in the no. of shares, enter 3 sigma+ for example is to indicate to HP12c the proportion (3) Since we key in total sigma = 12, HP12c will take that up and once we press g #6 key, the weighted average becomes computed. Hope this helps ;)
panvino I find it easier to do it like this:
[(200000*12) + (30000*9) + (12000*1)]/12 = 223500
bundy way easier this way
200,000
+ 30,000 x 9/12
+ 12,000 x 1/12
jpducros my 2 cents advise...don't bother entering the "thousands" in your calc. You'll save time.
poomie83 Damn the american date format!!
majesty Poomie83, LOL. Did you get something like:
200000 * 3/365 + 230000 * 8/365 + 242000 * 355/365 = 241393?
jayj001 lol month/day reversal just cost me 10 minutes!
gulfa99 I got the answer right..but how are we suppose to figure out the date format.
schweitzdm Is there a BA II Plus method for this, similar to the one mentioned for HP12C?
farhan92 awkward moment you enter 8/12 as 0.75 -.-
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