Question 4.15: Assume the same facts as in Example 4-14 except that on 1 De...
Assume the same facts as in Example 4-14 except that on 1 December 2006, the company institutes a two-for-one stock split. Each shareholder receives two shares in exchange for each current share that he or she owns. What is the company’s basic EPS?
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For EPS calculation purposes, a stock split is treated as if it occurred at the beginning of the period. The weighted average number of shares would, therefore, be 2,250,000, and the basic EPS would be $1.02.
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