weighted average of basic share
The weighted average of shares outstanding equals 500,000 times 0.75 plus 600,000 times 0.25, or 525,000 shares outstanding. Divide the income available to common shareholders by the weighted average number of common shares outstanding to calculate the basic EPS. In this example, divide $4.5 million by 525,000 shares to get an EPS of about $8.57.