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Questions on Dilluted EPS
Let’s say you get a Diluted EPS question during the real exam that includes all three items: convertible preferreds, convertible debt and warrants.
Are you going to bother calculating the dilutive effect of each of the three separately to make sure they’re not antidilutive? Are you going to do a quick “back of the napkin” calculation (say: say, dividing the par value of the convertible bonds by the number of shares they can be converted into and comparing that to the ending stock price)?
Or are you just going to assume that if they give you a question with all three, all three will be dilutive (unless, for example, the options are out of the money…)? |
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