The 20000 shares are outstanding from Jan 1 st to Feb 1 st or 112 th of the year. Applying the time proportionate weight to each outstanding in terms of month you get. The weighted average basic shares outstanding is the average number of shares that were outstanding over the time period.
However if the year-end share increase were due to a stock split that occurred on December 15th of the year the 15000 simple average result would not accurately reflect the day-to-day average for the entire year.
Book value per common share The formula to compute dividend yield takes annual cash dividends per share divided by. Shares outstanding proportion of period A shares outstanding proportion of period B weighted average of outstanding shares During the first period the companys weighted shares outstanding is 100000 05 or 50000. Company A has a net income of 12500 as per the latest financials. Diluted EPS Formula Net Income Before Preferred DividendsAfter Tax Cost of Interest Common Shares Outstanding Additional Shares Against Exercise of Convertible Securities Diluted EPS 2000000 0 800000 50000 Diluted EPS 2000000 850000.