A company with convertible bonds outstanding will need to adjust the denominator of the diluted EPS equation. If the bonds are outstanding all year, the adjustment will consist of the ________.

Question

Quizplus · Accepted Answer

The adjustment to the denominator of the diluted EPS equation for convertible bonds is the conversion ratio times the number of bonds outstanding, as this reflects the potential shares that could be issued if the bonds are converted into equity.

A Company with Convertible Bonds Outstanding Will Need to Adjust