If all of the dilutive securities were converted into ordinary shares, the diluted earnings per share ratio:
A) may include an adjustment to increase the weighted average number of ordinary shares that would be outstanding
B) must include an adjustment to decrease the weighted average number of ordinary shares that would be outstanding
C) must include an adjustment to increase the number of ordinary shares that would be outstanding
D) must include an adjustment to increase the weighted average number of ordinary shares that would be outstanding

Question

Quizplus · Accepted Answer

If all of the dilutive securities were converted into ordinary shares, the weighted average number of ordinary shares outstanding would increase. Therefore, the diluted earnings per share ratio would need to be adjusted to reflect this increase in the number of shares. Choice D correctly identifies this adjustment.

If All of the Dilutive Securities Were Converted into Ordinary