Smythe, Inc What Is the Correct Order of Entry into the EPS

question 36

Multiple Choice

Smythe, Inc. has four potentially dilutive securities. Computation of the antidilution sequencing recorded the following: $$\begin{array} { | l | c | c | } \hline{ \text { Security } } & \text { Increase in Income } & \text { Increase in Common Shares } \\\hline \text { Convertible Preferred Stock } & \$ 40,000 & 10,000 \\\hline \text { Stock Warrants } & \$ 0 & 1,000 \\\hline \text { Stock Options } & \$ 0 & 14,000 \\\hline \text { Convertible Bonds } & \$ 17,000 & 5,000 \\\hline\end{array}$$
What is the correct order of entry into the EPS computation? (Round any calculations to the nearest cent.)

• A) convertible preferred stock, stock warrants, convertible bonds, stock options
• B) stock options, stock warrants, convertible bonds, convertible preferred stock
• C) convertible bonds, convertible preferred stock, stock warrants
• D) stock options, convertible bonds, convertible preferred stock, stock warrants

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Definitions:

Special-Interest Effects

The impact that a small, focused group can have on policy-making to secure benefits for itself, often at the expense of the larger public interest.

Concentrated Benefits

Economic or political benefits that are narrowly distributed to a small, specific group, often leading to imbalanced influence or decision-making.

Diffuse Costs

Diffuse costs are expenses that are spread out and not easily attributed to a single product, project, or activity, often indirect in nature.

Unintended Consequences

Outcomes that are not the ones foreseen or intended by a purposeful action.