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Company A has correctly calculated its basic EPS for the current year
Company A has correctly calculated its basic EPS for the current year.
Which of the following items need to be additionally considered when calculating the diluted EPS for the year?
1) A repayment of a bank loan that had been taken 5 years ago
2) The issue during the year of a loan note convertible to equity shares
3) The granting during the year of managers' share options exercisable in four years' time
4) Payment of ordinary dividends
Group of answer choices
1) and 2) only
All the four
3) and 4) only
2) and 3) only
Expert Solution
Answer is option d 2) and 3) only
2) The issue during the year of a loan note convertible to equity shares
3) The granting during the year of managers' share options exercisable in four years' time
The additional consideration in diluted eps includes all those securities which are convertible . It includes convertible debentures , prefereence shares etc . The only difference in Diluted EPS and EPS formula is the denominator . In the denominator of diluted EPS conversion of dilutive securities is also included and because of it Diluted EPS is less than EPS
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