Nonconvertible, cumulative preferred shares affect the computation of EPS (for simple capital structure), basic EPS and diluted EPS.

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Nonconvertible, cumulative preferred shares affect the computation of basic EPS by requiring that dividends on these shares be subtracted from net income to calculate earnings available to common shareholders. However, they do not affect diluted EPS since they are not convertible into common shares.

Nonconvertible, Cumulative Preferred Shares Affect the Computation of EPS (For