"Earnings per share" (EPS) is the most featured, single financial statistic about modern corporations. Daily published quotations of stock prices have recently been expanded to include for many securities a "times earnings" figure that is based on EPS. Stock analysts often focus their discussions on the EPS of the corporations they study.
Instructions
- Explain how dividends or dividend requirements on any class of preferred stock that may be outstanding affect the computation of EPS.
- One of the technical procedures applicable in EPS computations is the "treasury-stock method."
Briefly describe the circumstances under which it might be appropriate to apply the treasury-stock method.
- Convertible debentures are considered potentially dilutive common shares. Explain how convertible debentures are handled for purposes of EPS computations.