Which Statement Is Correct

question 73

Multiple Choice

Which statement is correct?

• A)The numerator for diluted EPS is the same as the numerator for basic EPS.
• B)Potential ordinary shares are derivative instruments that entitle the holder to commodities.
• C)Potential ordinary shares are financial instruments that entitle the holder to ordinary shares.
• D)The numerator for diluted EPS is always greater than the numerator for basic EPS.

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Definitions:

Cumulative Preferred Stock

A type of preferred stock where dividends accrue if not paid in a given year, and all accrued dividends must be paid before dividends can be paid on common stock.

Dividends

A portion of a company's earnings that is paid to shareholders, usually on a quarterly basis.

Common Shareholders

Individuals or entities that own a portion of a company's equity through its common shares, giving them voting rights and a claim on a portion of its profits.

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, typically expressed as a percentage of the company's total net income.