An analyst gathers the following information about a company's common stock:
·1 January 2011 200,000 shares outstanding
·1 June 2011 50,000 shares issued
·1 August 2011 2 for I stock split
·31 December 2011500,000 shares outstanding
To calculate earnings per share for 2011, the company's weighted average number of shares outstanding is closest to:
C is correct. The weighted average number of shares is determined by the length of time each quantity of shares was outstanding. A stock split is treated as if it occurred at the beginning of the year.
200,000 × 5/12 83,333
250,000 × 7/12 145,833
Total before split229,166
Including effect of 2:1 split458,333