000 SHARES / 12 MONTHS = 5,000 AVERAGE SHARESPREFERRED DIVIDENDS =...

60,000 shares / 12 months = 5,000 average sharesPreferred dividends = ($10)(1,000) = $10,000Number of shares from the conversion of the preferred shares = (1,000 preferred shares)(8 × 1.1 shares of common/share ofpreferred) = 8,800 commonDiluted EPS = [$15,000(NI) − $10,000(pfd) + $10,000(pfd)] / (5,000 common shares + 8,800 shares from the conv. pfd.) =$15,000 / 13,800 shares = $1.09/shareThis number needs to be compared to basic EPS to see if the preferred shares are antidilutive.Basic EPS = [$15,000(NI) − $10,000(preferred dividends)] / 5,000 shares = $5,000 / 5,000 shares = $1/shareSince the EPS after the conversion of the preferred shares is greater than before the conversion the preferred shares areantidilutive and they should not be treated as common in computing diluted EPS. Therefore diluted EPS is the same as basicEPS or $1/share.

Question #24 of 90

Question ID: 414218

Which of the following data are least likely to be read directly from a common-size income statement?غ A)Net profit margin.ض B)Effective tax rate.غ C)Ratio of SG&A expense to sales.ExplanationThe effective tax rate is income tax expense as a percentage of pretax income. Items on a common-size income statement arestated as a percentage of revenue (sales). Net profit margin is net income as a percentage of revenue.

Question #25 of 90

Question ID: 414115

The following data pertains to the Megatron company:Net income equals $15,000.