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Luther Corporation Consolidated Income Statement Year ended 30 June (in $ millions)

-Refer to the income statement above. Assuming that Luther has no convertible bonds outstanding, then for the year ending 30 June 2018, Luther's diluted earnings per share are closest to:
A)$1.04
B)$1.01
C)$1.53
D)$3.92

Question

Use the table for the question(s)below.
Luther Corporation Consolidated Income Statement Year ended 30 June (in $ millions)
 
-Refer to the income statement above. Assuming that Luther has no convertible bonds outstanding, then for the year ending 30 June 2018, Luther's diluted earnings per share are closest to:
A)$1.04 
B)$1.01 
C)$1.53 
D)$3.92

Quizplus · Accepted Answer

Diluted earnings per share take into account the potential dilution from convertible securities. Since Luther has no convertible bonds outstanding, the diluted earnings per share will be the same as the basic earnings per share. Therefore, diluted earnings per share for Luther for the year ending 30 June 2018 is ($167 - $17) / 160 = $1.00, which is closest to option B, $1.01.

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