Culver Company’s net income for 2020 is $47,100. The only potentially dilutive securities outstanding were 1,000 options issued during 2019, each exercisable for one share at $6. None has been exercised, and 9,700 shares of common were outstanding during 2020. The average market price of Culver’s stock during 2020 was $15.
(a) Compute diluted earnings per share.
(b) Assume the same facts as those assumed for part (a), except that the 1,000 options were issued on October 1, 2020 (rather than in 2019). The average market price during the last 3 months of 2020 was $15. Compute diluted earnings per share.
On January 1, 2020, Allen Corporation purchased 30% of the 24,000 outstanding common shares of Towne Corporation at $15 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal. During the year, Towne Corporation reported a net income of $19,200. Towne Corporation declared and paid cash dividends of $6,400 on December 30, 2020, to shareholders on record. As of December 31, 2020, common shares of Towne Corporation were trading at $20 per share.
Record the entries in 2020 assuming that Allen Corporation had significant influence over Towne Corporation
Last year, Ellis Inc.’s earnings per share were $3.50, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how many years would it take for Ellis EPS to triple?
a. 9.29
b. 10.33
c. 11.47
d. 12.75
