In this workout, we're asked to calculate basic EPS. We've been provided with net income, some preferred stock, which has 8% dividend, common shares outstanding, and weighted average common share outstanding. A note tells us that the preferred stock has been treated as equity in the financial statements. That's important, because that means that this preferred stock will pay a dividend out of the net income. If it said the preferred stock had been treated as debt, then this instead would be preferred interest. That makes a big difference, because interest would already have been deducted in getting to net income. However, it's been treated as equity so we need to deduct the dividend. So we start off with net income 345,000. We then need to deduct the preferred dividend, so that's the 100,000 times that by 8%. So I can now get to my net income now available to common or ordinary shareholders, and that's going to be the 345,000 minus the 8,000 337,000.

I now can divide that by the weighted average common shares outstanding of 304,200. I don't want the common shares outstanding at the end of the year. I need the average over the year.

So divide the net income by the weighted average common shares outstanding. That gets me to my basic EPS of 1.11. Now in workout B, we've got a similar question. We're asked to calculate basic EPS. We're given a few figures that we could choose from. We've got net income, then we've got net income attributable to non-controlling shareholders, and then we've got net income attributable to the shareholders of the parent. We've then got weighted average common shares outstanding. So we need to choose between these three net income figures. Well, if we have a quick look, the net income at the top there, the 874, if I then subtract the 51,340 of net income attributable to non-controlling shareholders, then that gets us to the one at the bottom. That's what we want going into our EPS calculation. We don't want any net income that's going off to non-con controlling shareholders or minority interests. So our answer is going to start with net income to the common shareholders, 822,860.

by our weighted average common shares outstanding, which will then get us our basic EPS, and that comes to 4.39.