A company reports basic earnings per share of $5.00 per share.The company has convertible preferred stock that can be converted into common stock.What will fully diluted earnings per share equal?
A)$5.00 per share
B)more than $5.00 per share
C)less than $5.00 per share
D)There is not enough information.

Question

Quizplus · Accepted Answer

Fully diluted earnings per share accounts for the potential conversion of convertible securities like preferred stock into common stock, which increases the number of shares outstanding and typically results in a lower earnings per share compared to basic earnings per share.

A Company Reports Basic Earnings Per Share of $5