FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
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i need help with EPS. Thanks.
![**Stanley Department Stores Financial Summary**
**Reported Financials:**
Stanley Department Stores achieved a net income of $738,000 for the fiscal year ending December 31, 2021.
**Additional Information:**
- **Common Shares Outstanding (as of January 1, 2021):** 65,000
- **Incentive Stock Options:**
- Options vested in 2020 remained outstanding throughout 2021.
- A total of 12,000 options are available, each exercisable for one common share at an exercise price of $21.00.
- **Market Data:**
- The average market price for Stanley's common stock during the year was $25.20 per share.
- **Stock Transactions:**
- On August 30, Stanley sold an additional 15,000 common shares.
- **Debt Information:**
- Stanley carries $32,000 in short-term bank notes with a 10% interest rate.
- **Tax Rate:** The company's income is taxed at a rate of 25%.
**Calculation Requirements:**
You are required to compute Stanley’s basic and diluted earnings per share for the fiscal year ending December 31, 2021. Ensure all final calculations are reported in thousands and do not round any intermediate calculations.
**Summary of Earnings Per Share Calculation:**
- **Table Details:** Determine the numerator (net income) and use the appropriate denominator (weighted average shares outstanding for basic EPS; include potential shares for diluted EPS).
- **Basic EPS Formula:** \[\text{Earnings per Share (Basic)} = \frac{\text{Net Income}}{\text{Weighted Average Shares Outstanding}}\]
- **Diluted EPS Formula:** \[\text{Earnings per Share (Diluted)} = \frac{\text{Net Income}}{\text{Weighted Average Shares + Potential Shares from Options}}\]
Your comprehensive analysis should be informed by the above data and expressed accurately in the table provided below the instructions.](https://content.bartleby.com/qna-images/question/d521ccc3-f206-42e4-a559-52e40dd0d7d1/f2697f01-33a2-479c-81b7-2614e45fd2b1/uon2x_processed.png)
Transcribed Image Text:**Stanley Department Stores Financial Summary**
**Reported Financials:**
Stanley Department Stores achieved a net income of $738,000 for the fiscal year ending December 31, 2021.
**Additional Information:**
- **Common Shares Outstanding (as of January 1, 2021):** 65,000
- **Incentive Stock Options:**
- Options vested in 2020 remained outstanding throughout 2021.
- A total of 12,000 options are available, each exercisable for one common share at an exercise price of $21.00.
- **Market Data:**
- The average market price for Stanley's common stock during the year was $25.20 per share.
- **Stock Transactions:**
- On August 30, Stanley sold an additional 15,000 common shares.
- **Debt Information:**
- Stanley carries $32,000 in short-term bank notes with a 10% interest rate.
- **Tax Rate:** The company's income is taxed at a rate of 25%.
**Calculation Requirements:**
You are required to compute Stanley’s basic and diluted earnings per share for the fiscal year ending December 31, 2021. Ensure all final calculations are reported in thousands and do not round any intermediate calculations.
**Summary of Earnings Per Share Calculation:**
- **Table Details:** Determine the numerator (net income) and use the appropriate denominator (weighted average shares outstanding for basic EPS; include potential shares for diluted EPS).
- **Basic EPS Formula:** \[\text{Earnings per Share (Basic)} = \frac{\text{Net Income}}{\text{Weighted Average Shares Outstanding}}\]
- **Diluted EPS Formula:** \[\text{Earnings per Share (Diluted)} = \frac{\text{Net Income}}{\text{Weighted Average Shares + Potential Shares from Options}}\]
Your comprehensive analysis should be informed by the above data and expressed accurately in the table provided below the instructions.
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