"Diluted earnings per share" must assume the conversion of all convertible securities.

Question

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Diluted earnings per share is calculated by assuming that all convertible securities, such as convertible bonds or stock options, are converted into common shares. This is done to give a more accurate picture of the company's earnings per share, as it takes into account the potential impact of these securities on the number of outstanding shares.

"Diluted Earnings Per Share" Must Assume the Conversion of All