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Crane Corporation reported net income of $311,750 in 2017 and had 199,000 shares of common stock...

Crane Corporation reported net income of $311,750 in 2017 and had 199,000 shares of common stock outstanding throughout the year. Also outstanding all year were 48,000 options to purchase common stock at $10 per share. The average market price of the stock during the year was $15.

Compute diluted earnings per share

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Expert Solution

Calculation of Diluted EPS

Considering, Treasury Stock Method, for options and warrants to purchase common stock.

Assumed, that options are exercised at the beginning of the period, at the average market price during the period.

Number of Outstanding Shares converted from Options= 48000 Shares

Total Number of Shares Outstanding = 199000 Shares + 48000 Shares

= 247000 Shares

Net Income                                                                             $311,750

Weighted Average Number of shares Outstanding                247000 Shares

Diluted Earnings per Share     $311,750 / 247,000 Shares     $1.26

ekkarill92 answered 2 years ago
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