Firms with convertible preferred stock or other potentially dilutive securities outstanding

Question

Quizplus · Accepted Answer

Firms with convertible preferred stock or other potentially dilutive securities outstanding must present dual earnings-per-share amounts. They calculate basic earnings per share by taking net income attributable to common stock and dividing by the average number of common shares outstanding during the period. They also calculate diluted earnings per share when a firm has securities outstanding that, if exchanged for common stock would decrease basic earnings per share by 3 percent or more. Therefore, all of the above statements are true.

Firms with Convertible Preferred Stock or Other Potentially Dilutive Securities