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Running Head: EPS DATA AND INCOME STATEMENT FORMAT
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EPS Data and Income Statement Format
Student Name
Institution Affiliation
EPS DATA AND INCOME STATEMENT FORMAT
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Case 6-5: EPS data
a.
The term earnings per share are the total amount of applicable earnings to all shares of the joint
stock that are outstanding in the reported earning period. EPS is calculated using the weighted
average of the total number of outstanding shares within the stated period. Split stocks are
acknowledged collectively. However, minor nonrecurring stock dividends are at times ignored.
b.
Senior securities, as often used EPS, are securities that are highly prioritized when compared to
other securities in the event of liquidation. This means that when a company is declared bankrupt,
and settlement is done, holders of unsecured debt are only paid after holders of secured debt have
been paid. Due to their high-level safety, they are superior to common shares. Senior securities
offer low returns when compared to other securities in the pyramid, which in turn have a high
possibility of profits due to their high risks.
Residual securities refer to securities that can be transformed from one form to another. For
instance, a transformable bond that is converted into common stock and vice versa. When a stiff
competition exists in the market place, Corporations frequently offer residual securities to draw
investment capital. The amount of currently outstanding common stocks intensifies when Residual
securities are transformed.
EPS DATA AND INCOME STATEMENT FORMAT
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c.
i.
When current dividends on cumulative preferred stock, Dividends on preferred stock
are supposed to be subtracted from the net Income before computation of earnings per share
as applicable to common stock alongside other residual securities. The acquisition of the
company’s stock will decline the outstanding common stock as EPS decrease. All
calculations are being done based on the average number of shares weighted during the
outstanding period.
iii.
The current common shares will be increased by the stock split. The calculation is
done basing on the outstanding shares at the closure of the current year. Due to the decline
in the number of stock the changes reduce the EPS.
iv.
Preferred stock issued at a premium with a par liquidation value will affect the book
value calculation. However, there will be no effect on EPS computation unless when a
dividend is paid on it.
v.
There will be no effect since common stock is not measured as areal stock. Also, the
resultant ...