Which statement is correct about the "share effect" on EPS?
A)This is the incremental before-tax income available to ordinary shareholders.
B)This is the incremental after-tax income available to ordinary shareholders.
C)This is the incremental number of ordinary shares outstanding before conversion.
D)This is the incremental number of ordinary shares outstanding after conversion.

Question

Quizplus · Accepted Answer

The "share effect" on EPS refers to the impact of a change in the number of ordinary shares outstanding. This can occur due to the issuance or redemption of shares, the conversion of convertible securities, or the exercise of stock options or warrants. The correct statement is D, as it refers to the incremental number of ordinary shares outstanding after conversion, which is the most relevant factor in calculating EPS. The other options (A, B, and C) do not accurately describe the share effect on EPS.

Which Statement Is Correct About the "Share Effect" on EPS