When Computing Diluted EPS for a Company with a Complex

question 9

Multiple Choice

When computing diluted EPS for a company with a complex capital structure,what is the denominator in the computation?

• A) Number of common shares outstanding at year-end
• B) Weighted-average number of common shares outstanding
• C) Weighted-average number of common shares outstanding plus all other potentially antidilutive securities
• D) Weighted-average number of common shares outstanding plus all other potentially dilutive securities

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Definitions:

Income Statement

A financial document that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits.

Dividend Yield Ratio

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Par Value

A nominal value assigned to a security or stock as stated in the corporate charter.

Dividend Payout Ratio

This is a financial ratio that measures the percentage of earnings paid to shareholders in the form of dividends.