When a company has a complex capital structure, it must report both basic and diluted earnings per share.

Question

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When a company has a complex capital structure, such as convertible bonds or stock options, it must report both basic and diluted earnings per share in its financial statements. Basic earnings per share consider only the number of shares outstanding, while diluted earnings per share reflect the potential impact of dilutive securities that could be converted into common shares. This provides a more accurate representation of the company's earnings per share and helps investors make informed decisions about the company's financial performance.

When a Company Has a Complex Capital Structure, It Must