I have a question regarding stock splits and treasury stock.

Hypothetically..

100,000 shares outstanding

6/1: Company repurchases 5,000 shares

9/1: Company has a 2:1 stock split

In calculating the EPS for the year...will we use 190,00 shares as the denominator?

For some reason, it is not clear to me...

·         Basic EPS = Income available to common shareholders

                         Weighted average number of common shares O/S

Treasury stocks are not included in the calculation of shares outstanding as corporation cannot own part of itself.

Thus, shares outstanding = 100,000-5,000 = 95,000

Stock split is 2:1. Remember, that stock splits are applied retroactively (from beginning of the year), thus, total shares outstanding now becomes 95,000 X2 = 190,000

Yes, I believe that the T/S should be prorated for the 6 month period.

In any case, at 12/31 year end the company has 200,000 shares issued and 190,000 shares issued AND outstanding.

So for the WACSO it would be 200,000 for 6 months and 190,000 for the remaining monts=195,000 shares weighted.