Diluted Earnings Per Share & Basic Earnings Per Share With Multiple Convertible Securities
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11 سال پیش
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Accounting for basic earnings per
Accounting for basic earnings per share vs diluted earnings per share when multiple convertible securities are involved, (1) Basic earnings per share does not include any dilutive securities, diluted earnings per share requires a set-by-step process is reqired to determine the diluted earnings per share for a company, requires determining the incremental numerator and denominator effect for the EPS for each security, (A) Incremental numerator effect for EPS, (B) Incremental denominator effect for EPS, Step-1: Determine for each security EPS effect,Step-2: Rank EPS Effect from smallest to largest, Step-3: Computed EPS To Determine Diluted EPS, example is based on stock options & warrants, bonds & preferred stock on how each will affect EPS, No effect on numerator for stock options & warrants, Pay no dividend on convertible P/S for the year, Pay no interest on convertible bonds for the year (Bond Interest added back net of taxes) these amounts are added back to net income for numerator, the denominator is increased by the amount of security converted, example is based on stock options, convertible bonds & convertible preferred stock, detailed calculations by Allen Mursau
11 سال پیش
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