Blue Corporation began its latest fiscal year on January 1,2023, with 460,000 common shares outstanding. During the year, the following events occurred: - On February 1, Blue sold 15,600 additional common shares. - The company declared and issued a 25\% stock dividend on March 1. - On June 1, Blue repurchased and cancelled 3,900 common shares. - An additional 4.700 common shares were issued on July 1. - On September 1, Blue declared and issued a three-for-one stock split. - On December 1, Blue issued an additional 13,800 shares. - Following the fiscal year, Blue declared and issued a two-for-one stock split on February 1, 2024. The company issued its 2023 financial statements on April 30, 2024. Calculate the weighted average number of commonstares that Dluenould use for calculating its EPS numbers for 2023. - On December 1, Blue issued an additional 13,800 shares. - Following the fiscal year, Blue declared and issued a two-for-one stock split on February 1, 2024. The company issued its 2023 financial statements on April 30, 2024. Calculate the weighted average number of commonshares tha Blue should use for calculating its EPS numbers for 2023. Weighted average number of common shares
To calculate the weighted average number of common shares, we need to consider the amount of time each share was outstanding. We will calculate the weighted average in three steps.
Step 1: Determine the time period for each share.
- 460,000 common shares were outstanding from January 1 to February 1 (31 days).
- 475,600 common shares were outstanding from February 1 to March 1 (28 days).
- 619,400 common shares were outstanding from March 1 to June 1 (92 days).
- 615,500 common shares were outstanding from June 1 to July 1 (30 days).
- 620,200 common shares were outstanding from July 1 to September 1 (62 days).
- 620,200 common shares were outstanding from September 1 to December 1 (91 days).
- 634,000 common shares were outstanding from December 1 to April 30, 2024 (151 days).
Step 2: Calculate the weighted time for each period.
- For the period from January 1 to February 1: 460,000 common shares * 31 days = 14,260,000 shares-days.
- For the period from February 1 to March 1: 475,600 common shares * 28 days = 13,324,800 shares-days.
- For the period from March 1 to June 1: 619,400 common shares * 92 days = 56,968,800 shares-days.
- For the period from June 1 to July 1: 615,500 common shares * 30 days = 18,465,000 shares-days.
- For the period from July 1 to September 1: 620,200 common shares * 62 days = 38,444,400 shares-days.
- For the period from September 1 to December 1: 620,200 common shares * 91 days = 56,462,200 shares-days.
- For the period from December 1 to April 30, 2024: 634,000 common shares * 151 days = 95,734,000 shares-days.
Step 3: Calculate the weighted average.
- Weighted average = (14,260,000 + 13,324,800 + 56,968,800 + 18,465,000 + 38,444,400 + 56,462,200 + 95,734,000) / 365
- Weighted average = 293,658,200 / 365
- Weighted average = 804,400 common shares.
Therefore, Blue Corporation should use 804,400 common shares as the weighted average number when calculating its EPS numbers for 2023.
To calculate the weighted average number of common shares for Blue Corporation for 2023, we need to consider the shares outstanding during various periods and the time they were outstanding.
Let's break down the events and calculate the weighted average number of common shares for each period:
1. January 1 to January 31: No changes in shares during this period, so the weighted average is 460,000.
2. February 1 to February 28: Blue sold 15,600 additional common shares on February 1. The weighted average is calculated as follows:
((Number of days * Number of shares) + (Number of days * Number of shares)) / Total number of days
((28 * 460,000) + (3 * 15,600)) / 31 = 470,600
3. March 1 to May 31: Blue declared and issued a 25% stock dividend on March 1. The weighted average is calculated as follows:
((Number of days * Number of shares) + (Number of days * Number of shares)) / Total number of days
((92 * 470,600) + (92 * 117,650)) / 365 = 474,602 (rounded to the nearest whole number)
4. June 1 to June 30: Blue repurchased and canceled 3,900 common shares on June 1. The weighted average is calculated as follows:
((Number of days * Number of shares) + (Number of days * Number of shares)) / Total number of days
((30 * 474,602) + (0 * 470,600)) / 30 = 474,602
5. July 1 to August 31: Blue issued an additional 4,700 common shares on July 1. The weighted average is calculated as follows:
((Number of days * Number of shares) + (Number of days * Number of shares)) / Total number of days
((62 * 474,602) + (62 * 479,302)) / 365 = 476,823 (rounded to the nearest whole number)
6. September 1 to November 30: Blue declared and issued a three-for-one stock split on September 1. The weighted average is calculated as follows:
((Number of days * Number of shares) + (Number of days * Number of shares)) / Total number of days
((91 * 476,823) + (91 * 1,430,469)) / 365 = 857,516 (rounded to the nearest whole number)
7. December 1 to April 30: Blue issued an additional 13,800 shares on December 1, and a two-for-one stock split was declared and issued on February 1, 2024. The weighted average is calculated as follows:
((Number of days * Number of shares) + (Number of days * Number of shares)) / Total number of days
((120 * 857,516) + (120 * 1,715,032)) / 365 = 1,215,188 (rounded to the nearest whole number)
The weighted average number of common shares that Blue should use for calculating its EPS numbers for 2023 is 1,215,188.