Question

Bull Inc. has net income this year of $1,425,000. At the beginning of the year, they...

Bull Inc. has net income this year of $1,425,000. At the beginning of the year, they had 250,000 shares outstanding. On April 1st, they issued 50,000 additional shares and then repurchased 20,000 on October 1st. Calculate Bull Inc.'s earnings per share (EPS) for the year.

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Answer #1
Date Explanation number of shares period of outstanding out of 12 months weighted average number of shares
1/1 Beginning 250000 3/12 (1Jan-1April) 250000*3/12= 62500
1/4 Issue 250000+50000=300000 6/12 (1April-1Oct) 300000*6/12=150000
1/10 Repurchase 300000-20000=280000 3/12 (1Oct-31Dec) 280000*3/12= 70000
weighted average number of shares outstanding 282500

Earning per share =Net income/weighted average number of shares outstanding

             = 1425000/282500

             = $ 5.0442 per share (rounded to 5.04)

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