1. Ajax Enterprises had 220,000 shares of common stock issued and outstanding at December 31, 2025....

Ajax Enterprises had 220,000 shares of common stock issued and outstanding at December 31, 2025. Unexercised stock options to purchase 40,000 shares of common stock at $20 per share were outstanding at the beginning and end of 2026. The market price of Glendale's common stock was $25 per share during 2026. Net income for the year ended December 31, 2026, was $1,100,000. What should be Ajax's 2026 diluted earnings per common share, rounded to the nearest penny?

2.Ajax Corporation began 2024 with 100,000 common shares outstanding. On April 1, 2024 they issued 20,000 additional common shares. On August 1, 2024 they declared a 2 for 1 stock split. What is the weighted-average number of common shares for the year 2024?

Solutions

Expert Solution

1
Calculate weighted average number of shares to calculated diluted earnings per share
Shares outstanding at beginning of period	220,000
Shares under stock option	8,000	40000 - (40000*20)/25
Weighted average no of shares	228,000

Diluted earnings per share	Net income/Weighted average no of shares
Diluted earnings per share	1100000/228000
Diluted earnings per share	$4.82
Thus, diluted earnings per share is $4.82

2
Calculate weighted average number of shares outstanding
Common shares outstanding (100000*2)	200,000
Additional shares issued (2000029/12)	30,000
Weighted average no of shares outstanding	230,000

Thus, weighted average number of shares outstanding is $230,000

ekkarill92 answered 1 year ago

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