On April 1, 2018, Owl Co. sold $2,000,000, 5% bonds at par, convertible to 18,000 common stock, but not converted in 2018. In 2018 Owl reported $600,000 net income, declared no dividends, had a 20% tax rate and 90,000 common shares outstanding all year. What is Owl's 2018 diluted EPS?

Question

Business

Declan Morrison

24 March, 13:58

On April 1, 2018, Owl Co. sold $2,000,000, 5% bonds at par, convertible to 18,000 common stock, but not converted in 2018. In 2018 Owl reported $600,000 net income, declared no dividends, had a 20% tax rate and 90,000 common shares outstanding all year. What is Owl's 2018 diluted EPS?

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Answers (1)

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Eddie Houston · Answer 1

Answer:$4.44

Explanation:

Net income after tax is $600,00 less 20% = $480,000

Total shares for diluted eps 90,000+18,000 = 108,000

Diluted eps = 480,000/108,000

= $4.44

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