Which statement is correct?
A)The numerator for diluted EPS is the same as the numerator for basic EPS.
B)Potential ordinary shares are derivative instruments that entitle the holder to commodities.
C)Potential ordinary shares are financial instruments that entitle the holder to ordinary shares.
D)The numerator for diluted EPS is always greater than the numerator for basic EPS.

Question

Quizplus · Accepted Answer

Potential ordinary shares are financial instruments that entitle the holder to ordinary shares, such as stock options or convertible bonds. The numerator for diluted EPS includes both the basic EPS numerator and the potential ordinary shares that could be converted into ordinary shares, which means it will either be the same as or greater than the numerator for basic EPS, depending on whether any potential ordinary shares are included.

Which Statement Is Correct