When Do You Weight Shares for FAR EPS?
First read the requirement. Ending shares outstanding and weighted-average shares are not the same calculation.
Weighted average is for EPS
Basic and diluted EPS generally use weighted-average common shares outstanding during the period.
New issuances
Shares issued during the year are weighted for the portion of the year they were outstanding.
Treasury stock purchases
When shares are repurchased, outstanding shares decline from the repurchase date and the reduction is weighted for the applicable period.
Stock splits and stock dividends
Stock splits and stock dividends receive retroactive treatment for EPS purposes under applicable rules rather than ordinary time weighting like a cash issuance.
Ending vs average shares
If the question asks for December 31 shares outstanding, calculate ending shares. If it asks for basic EPS denominator, use the weighted average.
The takeaway
Only weight shares when the calculation requires an average over the reporting period.
Related Summit guides
FAQ
Do stock splits get time-weighted like new issuances?
Generally no. EPS rules apply retroactive treatment.
Do treasury shares count as outstanding?
No.
Do authorized shares enter basic EPS?
Only actual common shares outstanding are relevant.