In calculating fully diluted earnings per share, earnings must be adjusted for ____.
A) interest saved
B) the number of convertible securities in the marketplace
C) the number of executive bonus packages that could impact the firm's earnings
D) the company's credit rating

Question

Quizplus · Accepted Answer

Interest saved is added back to earnings when calculating fully diluted earnings per share because it reflects the interest expense that would not be incurred if convertible securities were converted into equity.

In Calculating Fully Diluted Earnings Per Share, Earnings Must Be