Asked by Chirag Berry on Jun 15, 2024
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When a company calculates its earnings per common share for its financial statements, it uses the weighted-average number of common shares outstanding during the year. Suppose Enertec Corp. began its fiscal year (January 1 to December 31) with 5 million shares outstanding. On March 1, it sold a new public offering of 1 million shares. On June 1, employees and officers exercised stock options resulting in the issue of 500,000 common shares. On November 1, another 750,000 shares were issued when holders of convertible bonds chose to exercise the conversion privilege. What was the average number of common shares outstanding during the year? (Assume that each month has the same length.)
Weighted-Average Number
A calculation that takes into account the varying degrees of importance of the numbers in a dataset, giving some numbers more weight than others.
Common Shares
Shares of ownership in a corporation that entitle the shareholder to vote on corporate matters and receive dividends.
Fiscal Year
A financial year used by governments and businesses for accounting purposes, which may or may not align with the calendar year.
- Familiarize and engage with basic numeric operations and their properties to address issues found in the real world.
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SB
Learning Objectives
- Familiarize and engage with basic numeric operations and their properties to address issues found in the real world.