Question

Kasravi Co. had net income for 2024 of $300,000. The average number of shares outstanding for the period was 200,000 shares. Stock options for 12,000 shares had an option price of $30. The average market price of the common stock during the year was $36. What should Kasravi Co. report for diluted earnings per share for the year ended 2024

Answer 1

Answer: $1.49

Explanation:

First, we would calculate the diluted shares outstanding which will be:

= 200,000 + 12,000(6/36)

= 200,000 + 12,000(1/6)

= 200,000 + 2,000.

= 202,000

Diluted earnings per share = Net income / Diluted shred Outstanding

= 300,000 / 202,000

= $1.49