Question 4.20: An Antidilutive Security For the year ended 31 December 2006...

International Financial Statement Analysis

An Antidilutive Security

For the year ended 31 December 2006, Dim-Cool Utility Company had net income of $1,750,000. The company had an average of 500,000 shares of common stock outstanding, 20,000 shares of convertible preferred, and no other potentially dilutive securities. Each share of preferred pays a dividend of $10 per share, and each is convertible into three shares of the company’s common stock. What was the company’s basic and diluted EPS?

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