explain why investors should be more interested in the Diluted EPS number than the Basic EPS...
- explain why investors should be more interested in the Diluted EPS number than the Basic EPS number.
Homework Answers
DILUTED E.P.S ARE CALCULATED WHEN THERE ARE POTENTIAL ORDINARY SHARES IN CAPITAL STRUCTURE OF THE COMPANY.
(POTENTIAL ORDINARY SHARES ARE THOSE FINANCIAL INSTRUMENTS WHICH ENTITLE TO ITS HOLDER THE RIGHT TO ACQUIRE ORDINARY SHARES LIKE CONVERTIBLE DEBENTURE, CONVERTIBLE PREFERENCE SHARES,OPTIONS, WARRANTS ETC.)
BASIC E.P.S MEASURES ONLY HOW MUCH A COMPANY EARNS PER SHARE WITHOUT GOING TO ANY OTHER DETAILS (IT DOES NOT CONSIDER CONVERTIBLE SECURITIES...)
CONSIDERATION OF CONVERTIBLE SECURITIES ARE VERY IMPORTANT FROM THE POINT OF VIEW OF INVESTORS
WITH THE HELP OF DILUTED EPS DATA INVESTOR CAN DETERMINE HOW WOULD BE THE EPS IF CONVERTIBLE SECURITIES WERE CONVERTED IN TO STOCKS. (IT PROVIDES WORST SCENARIO FOR EPS)
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explain why investors should be more interested in the Diluted
EPS number than the Basic EPS...
: basic and diluted EPS. Basic E On a firm's income statement, you likely will see...
: basic and diluted EPS. Basic E On a firm's income statement, you likely will see two entries for earnings per share (EPS): basic and diluted EPS. Basic EPS is the firm's net income available to shareholders divided by the number of shares of common stock. However, while common shares are definite claims of an owner's equity, unexercised stock options, convertible debt and preferred stock, and warrants represent potential claims on an owner's equity. If they are exercised or converted,...
Diluted earnings per share (EPS) are found by adjusting basic EPS for the impact of converting...
Diluted earnings per share (EPS) are found by adjusting basic EPS for the impact of converting all convertibles and exercising all warrants and options that would have diluting effects on a firm's earnings. True or False
Don't know how to get the value in blue to get diluted EPS from each operation...
Don't know how to get the value in blue to get diluted EPS from
each operation
Delicious Subs Ltd. (DSL) was incorporated on January 1, 2021. Its capital structure includes 9,000 ordinary shares; 1,800, $60,2% cumulative preferred shares; and 3,500 options on ordinary shares with a strike price of $12. DSL's net income (loss) for the year ended December 31, 2021, was ($13,000), consisting of a profit from continuing operations of $40,000 and a loss from discontinued operations of ($53,000)....
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: basic and diluted EPS. Basic E On a firm's income statement, you likely will see two entries for earnings per share (EPS): basic and diluted EPS. Basic EPS is the firm's net income available to shareholders divided by the number of shares of common stock. However, while common shares are definite claims of an owner's equity, unexercised stock options, convertible debt and preferred stock, and warrants represent potential claims on an owner's equity. If they are exercised or converted,...
Don't know how to get the value in blue to get diluted EPS from
each operation
Delicious Subs Ltd. (DSL) was incorporated on January 1, 2021. Its capital structure includes 9,000 ordinary shares; 1,800, $60,2% cumulative preferred shares; and 3,500 options on ordinary shares with a strike price of $12. DSL's net income (loss) for the year ended December 31, 2021, was ($13,000), consisting of a profit from continuing operations of $40,000 and a loss from discontinued operations of ($53,000)....
8. If dividends are taxed more heavily than capital gains, investors: a) Should pay more for stocks with low dividend yields b) Should pay more for stocks with high dividend yields c) Should pay the same for stocks regardless of the dividend yields d) Cannot be predicted as stock prices fluctuate randomly 9. Firm Alpha has a value of £300 million and Firm Beta has a value of £200 million. Merging the two companies would allow cost savings with a...
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