Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition,...

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition, it had 90,000 stock options outstanding, which had been granted to certain executives on June 30, 2020, and which gave them the right to purchase shares of Ferry's stock at an option price of $35 per share. The average market price of Ferry's common stock for 2020 was $50. Net income was $1,000,000. SHOW ALL COMPUTATIONS>

Compute EPS.
Compute DEPS.

Expert Solution

Solution:

a.	EPS	$ 3.33
b.	DEPS	$ 3.19

Net Income [A]	1,000,000.00

Weighted Common Stock Outstanding [B]	300,000.00
Add: Stock Options [Working]	13,500.00
Weighted Common Stock Outstanding [Adjusted] [C]	313,500.00

Working:
Proceeds from Stock options [a] [90000*35]	$ 3,150,000.00
Average Market Price [b]	50.00
Shares assumed purchased [c=a/b]	63,000.00
Shares assumed Issued [d][Given]	90,000.00
Incremental Share Increase [e=d-c]	27,000.00
Weighted Outstanding [f]	0.50
Weighted Incremental Increased Share [e*f]	13,500.00

EPS [A/B]	$ 3.33
DEPS [A/C]	$ 3.19

ekkarill92 answered 1 year ago

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition, it...

Ferry Corporation had 300,000 shares of common stock outstanding at December 31, 2020. In addition, it had 90,000 stock options outstanding, which had been granted to certain executives on June 30, 2020, and which gave them the right to purchase shares of Ferry's stock at an option price of $35 per share. The average market price of Ferry's common stock for 2020 was $50. Net income was $1,000,000. SHOW ALL COMPUTATIONS> Compute EPS. Compute DEPS.

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares...

On December 31, 2020, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 60,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow’s net income...

On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 27,000 shares...

On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 27,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2021, Jackson purchased 14,000 shares of common stock on the open market as treasury stock for $25 per share. Jackson sold 5,000 treasury shares on September 30, 2021, for $27 per share. Net income for 2021 was $170,905. Also outstanding during the year were fully vested incentive stock options giving key executives the...

On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 40,000 shares...

On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 40,000 shares of 6%, $50 par, cumulative preferred stock outstanding. On February 28, 2021, Jackson purchased 34,000 shares of common stock on the open market as treasury stock for $45 per share. Jackson sold 7,000 treasury shares on September 30, 2021, for $47 per share. Net income for 2021 was $190,905. Also outstanding during the year were fully vested incentive stock options giving key executives the...

On December 31, 2020, Heffner Company had 100,000 shares of common stock outstanding and 30,000 shares...

On December 31, 2020, Heffner Company had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $100 par, cumulative preferred stock outstanding. On February 28, 2021, Heffner purchased 24,000 shares of common stock on the open market as treasury stock paying $45 per share. Heffner sold 6,000 of the treasury shares on September 30, 2021, for $47 per share. Net income for 2021 was $540,000. The income tax rate is 25%. Also outstanding at December 31, 2020, were...

Marigold Corp. had 1540000 shares of common stock issued and outstanding at December 31, 2020. On...

Marigold Corp. had 1540000 shares of common stock issued and outstanding at December 31, 2020. On July 1, 2021 an additional 1255000 shares were issued for cash. Marigold also had stock options outstanding at the beginning and end of 2021 which allow the holders to purchase 370000 shares of common stock at $20 per share. The average market price of Marigold's common stock was $25 during 2021. What is the number of shares that should be used in computing diluted...

. On December 31, 2020, Heffner Company had 100,000 shares of common stock outstanding and 30,000...

. On December 31, 2020, Heffner Company had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $100 par, cumulative preferred stock outstanding. On February 28, 2021, Heffner purchased 24,000 shares of common stock on the open market as treasury stock paying $45 per share. Heffner sold 6,000 of the treasury shares on September 30, 2021, for $47 per share. Net income for 2021 was $540,000. The income tax rate is 25%. Also outstanding at December 31, 2020,...

On December 31, 2020, Dow Steel Corporation had 640,000 shares of common stock and 304,000 shares...

On December 31, 2020, Dow Steel Corporation had 640,000 shares of common stock and 304,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $440,000 and $73,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 57,000 common shares. In keeping with its long-term share repurchase plan, 6,000 shares were retired on July 1. Dow's net income...

On December 31, 2020, Dow Steel Corporation had 660,000 shares of common stock and 306,000 shares...

On December 31, 2020, Dow Steel Corporation had 660,000 shares of common stock and 306,000 shares of 10%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $460,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 56,000 common shares. In keeping with its long-term share repurchase plan, 2,000 shares were retired on July 1. Dow's net income...

On December 31, 2020, Dow Steel Corporation had 720,000 shares of common stock and 312,000 shares...

On December 31, 2020, Dow Steel Corporation had 720,000 shares of common stock and 312,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $520,000 and $81,000 to common and preferred shareholders, respectively, on December 15, 2021. On February 28, 2021, Dow sold 66,000 common shares. In keeping with its long-term share repurchase plan, 8,000 shares were retired on July 1. Dow's net income...

Question