(2) EARNINGS PER COMMON SHARE AND CASH DIVIDENDS

Basic earnings per common share (“EPS”) is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is calculated by dividing net income by the weighted average number of common shares outstanding, adjusted to reflect potentially dilutive securities (options) using the treasury stock method, except when the effect would be anti-dilutive.

 

The number of shares used in calculating basic and diluted earnings per share is as follows:

 

		For the Three Months Ended January 31,
		2016				2015
Weighted average common shares outstanding:
Basic			5,103,434				5,080,911
Effect of dilutive securities:
Options to purchase shares of common stock			31,463				26,071
Diluted			5,134,897				5,106,982

For each of the three month periods ended January 31, 2016 and 2015, the Company had zero stock options outstanding that could potentially dilute earnings per share in future periods but were excluded from the computation of diluted EPS because their exercise price was higher than the Company’s average stock price during the respective periods.

On January 13, 2016, the Company declared a quarterly cash dividend of $0.25 per share payable on February 16, 2016 to shareholders of record on February 1, 2016. The total dividend of $1.3 million is recorded in accrued expenses at January 31, 2016 and was paid on February 16, 2016.