[Sherrid]

Becker Chapter 7 question 7/27

In the calculation of EPS- Becker’s answer did not subtract the Preferred divs paid from Net Income to calculate basic EPS?

Can some one help me?

[Peanut]

@Sherrid, double check Becker.com to see if maybe it was a mistake that they fixed. All of their updates are on their site!

Created with Compare Ninja

AUD 81 (X4) Previous scores 59, 72, 72
REG 80 (X3) Previous scores 59, 60
FAR 75 (X2) Previous score 67
BEC 79 (X2) Previous score 58

[Anonymous]

Sherrid,

When you have cumulative preferred stock you only deduct that year’s dividend, even if it’s not paid.

So, if they paid for 2 years worth of dividends this year you only deduct for one, because last year’s portion was deducted from last year’s EPS. It’s like matching expenses to correct period. Cash outflow is not relevant. You can ignore what they paid and calculate what cumulative preferred earned this year and deduct that amount.

Payment or declaration of payment only meters when it’s non cumulative preferred stock.

That’s how I understand it. Hey you might be taking an advice from somebody who got 52 on his exam. 🙂

[Yvonne570]

Check the becker site, they have some updates or contact them.

AUD - Passed:)
FAR - Passed:)
REG - Retake TBD
BEC - Missed by 3 points Retake TBD

[Author]

Replies