Rudyard Corporation had 160,000 shares of common stock and 16,000 shares of 8%, $100 par convertible preferred stock outstanding during the year. Net income for the year was $520,000 and dividends were paid to both common and preferred shareholders. Rudyard's effective tax rate is 25%. Each share of preferred stock is convertible into five shares of common stock. What is Rudyard's diluted EPS (rounded)

Diluted EPS = $3.0625

Explanation:

Earning per share (EPS) = earnings available to ordinary shareholders/ number of ordinary shares  possible after conversion

Conversion of preferred stock into common stock

= 16,000 × 5 = 80,000

Number of ordinary shares = common stock + converted preferred stock

= 160000+ 80000  =240,000 units

                                                                     $

Net Income                                             520,000

Preferred dividend (8%×100×16000)     (128000)

Earnings available to shareholders      392000

Number of shares                                   240,000

Diluted Earnings per share          

        392,000/240,000= $3.0625

Diluted EPS = $3.0625

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.