Which statement is correct about potential ordinary shares (POS)?
A)Dilutive POS decrease EPS.
B)Dilutive POS increase EPS.
C)Anti-dilutive POS decrease EPS
D)Anti-dilutive POS are included in EPS.

Question

Quizplus · Accepted Answer

Potential ordinary shares (POS) are securities that can be converted into ordinary shares if certain conditions are met, such as the exercise of stock options or the conversion of convertible bonds. Dilutive POS would increase the number of outstanding shares and decrease the earnings per share (EPS) since the company's profits are spread out over a larger number of shares. Therefore, A is the correct statement. B and D are incorrect statements. C is also incorrect as anti-dilutive POS would not have any impact on EPS.

Which Statement Is Correct About Potential Ordinary Shares (POS)