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Basic Question 11 of 40
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?
B. 1,200,000 shares
C. 1,325,000 shares
A. 1,000,000 shares
B. 1,200,000 shares
C. 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^ |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe how earnings per share is calculated and calculate and interpret a company's basic and diluted earnings per share for companies with simple and complex capital structures including those with antidilutive securities
CFA® 2024 Level I Curriculum, Volume 2, Module 2.