14 Feb Let’s start by defining the following terms. ?? a.? Basic earnings per share. ?? b.? Potentially dilutive security. ??? c. Dilut
1) Let's start by defining the following terms.
a. Basic earnings per share.
b. Potentially dilutive security.
c. Diluted earnings per share.
d. Complex capital structure.
e. Potential common stock.
2) Why are preferred dividends deducted from net income when calculating EPS? Are there circumstances when this deduction is not made?
Answer–
Preferred stock holders have a priority in receiving dividends before common stock holders. Also, preferred stock holders usually get a fixed rate of dividend every year irrespective of company's profits. Due to this reason, we need to deduct preferred dividends from net income when calculating Basic EPS.
This deduction is not made when we calculate Diluted EPS in case of convertible preferred stock. However, this increases the denominator (since weighted outstanding diluted common shares will also include convertible preferred shares).
Instructions
write a answer for question no 1 and for 2 peer review.
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.