ACC 302 PPt 19

ACC 302 PPt 19 - 1 Earnings Per Share Learning Objectives...

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1 Earnings  Earnings  Per Share Per Share
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2 Detail recent changes in accounting standards relating to earnings per share, and know why the changes were made and how these changes will affect computations relating to earnings per share. Know the difference between a simple and a complex capital structure, and understand how dilutive securities affect earnings per share computations. Learning Objectives
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3 Compute basic earnings per share, taking into account the sale and repurchase of stock during the period as well as the effects of stock splits and stock dividends. Use the treasury stock method to compute diluted earnings per share when a firm has outstanding stock options, warrants, and rights. Learning Objectives
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4 Use the if-converted method to compute diluted earnings per share when a company has convertible preferred stock or convertible bonds outstanding. Factor into the diluted earnings per share computations the effect of actual conversion of convertible securities or the exercise of options, warrants, or rights during the period, and understand the antidilutive effect of potential common shares when a firm reports a loss from continuing operations. Learning Objectives
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5 Learning Objectives Determine the order in which multiple potential dilutive securities should be considered in computed diluted earnings per share. Understand the disclosure requirements associated with basic and diluted earnings per share computations. Make complex earnings per share computations involving multiple potentially dilutive securities. EXPANDED MATERIAL
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6 A firm’s net income does not necessarily correlate with its earnings per share figure.
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7 Two EPS Computations Considers only Considers only common shares common shares issued and issued and outstanding. outstanding. Basic Basic
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8 Reflects the Reflects the maximum potential maximum potential dilution from all dilution from all possible stock possible stock conversions that conversions that would have decreased would have decreased EPS. EPS. Diluted Diluted Two EPS Computations Considers only Considers only common shares common shares issued and issued and outstanding. outstanding. Basic Basic
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Dilution of Earnings Dilutive Securities : Securities whose assumed exercise or conversion results in a reduction in earnings per share. Antidilutive Securities
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This document was uploaded on 06/11/2009.

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ACC 302 PPt 19 - 1 Earnings Per Share Learning Objectives...

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