EPS; convertible preferred stock; convertible bonds; order of entry
Response to the following problem:
Information from the financial statements of Henderson-Niles Industries included the following at December 31, 2016:
Common shares outstanding throughout the year 100 million
Convertible preferred shares (convertible into 32 million shares of common) 60 million
Convertible 10% bonds (convertible into 13.5 motion shares of common) $900 million
Henderson-Niles' net income for the year ended December 31, 2016, is $520 million. The income tax rate is 40%. Henderson-Niles paid dividends of $2 per share on its preferred stock during 2016.
Required:
Compute basic and diluted earnings per share for the year ended December 31, 2016.