Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 9

Using Earings Share Statistics
For many years New York Studios has produced television shows and operated several FM radio stations.ate in the current year, the radio stations were sold to Times Publishing, Inc.lso during the current year, New York Studios sustained an extraordinary loss when one of its camera trucks caused an accident in an international grand prix auto race.hroughout the current year, the company had 3 million shares of common stock and a large quantity of convertible preferred stock outstanding.arnings per share reported for the current year were as follows:

Instructions
a.riefly explain why New York Studios reports diluted earnings per share amounts as well as basic earnings per share.hat is the purpose of showing investors the diluted figures
b.hat was the total dollar amount of the extraordinary loss sustained by New York Studios during the current year
c.ssume that the price-earnings ratio shown in the morning newspaper for New York Studios's common stock indicates that the stock is selling at a price equal to 10 times the reported earn­ings per share.hat is the approximate market price of the stock
d.ssume that you expect both the revenue and expenses involved in producing television shows to increase by 10 percent during the coming year.hat would you forecast as the company's basic earnings per share for the coming year under each of the following independent assump­tions (Show your computations and explain your reasoning.)
1.one of the convertible preferred stock is converted into common stock during the com­ing year.
2.ll of the convertible preferred stock is converted into common stock at the beginning of the coming year.