How does Management Recruiters calculate basic earnings per share?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
the contingent consideration recognized during the period.
Earnings per Share
We calculate basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. We do not include the impact of any potentially dilutive common stock equivalents in our basic earnings (loss) per share calculations. Diluted earnings per share reflect the potential dilution of securities that could share in our earnings through the conversion of common shares issuable via outstanding stock options and unvested restricted shares, except where their inclusion would be anti-dilutive. Outstanding common stock equivalents at December 31, 2021 and December 31, 2020 totaled approximately 209,000 and 308,000, respectively.
Diluted common shares outstanding were calculated using the treasury stock method and are as follows:
| Year ended | |||||
|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | ||||
| Weighted average number of common shares used in basic net income per common share | 13,493,715 | 13,542,403 | |||
| Dilutive effects of stock options and unvested restricted stock | 111,952 | 111,725 | |||
| Weighted average number of common shares used in diluted net income per common share | 13,605,667 | 13,654,128 |
Property and Equipment
We record property and equipment at cost. We compute depreciation using the straight-line method over the estimated useful lives. Land is not depreciated.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the company calculates basic earnings per share by dividing the net income or loss available to common stockholders by the weighted average number of common shares outstanding. This calculation does not include the impact of any potentially dilutive common stock equivalents.
For example, the basic earnings per share for December 31, 2023, was $0.45, calculated from a net income of $6,135,000 and a basic weighted average shares outstanding of 13,733,000. In comparison, for the year ended December 31, 2022, the basic earnings per share was $0.91, based on a net income of $12,429,000 and a basic weighted average shares outstanding of 13,654,000.
Management Recruiters also calculates diluted earnings per share, which reflect the potential dilution of securities that could share in the company's earnings through the conversion of common shares issuable via outstanding stock options and unvested restricted shares. However, these are excluded if their inclusion would be anti-dilutive. Outstanding common stock equivalents at the end of 2023 and 2022 totaled approximately 155,000 and 215,000, respectively. The diluted earnings per share was also $0.45 in 2023 and $0.91 in 2022. Diluted common shares outstanding were calculated using the treasury stock method and totaled 13,801,000 in 2023 and 13,721,000 in 2022.