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8 December, 01:57

Nonconvertible bonds affect the calculation of:A. Basic earnings per share. B. Diluted earnings per share. C. Both A and B. D. None of these is correct.

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  1. 8 December, 02:43
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    D. None of these is Correct

    Explanation:

    Earnings Per Share (EPS) and Diluted Earnings Per Share represents analysis measure used by organisations to analysis their levels of profitability.

    Specifically, EPS uses a per-share basis to measure an organisation's profit and does not take into consideration the effects of convertible securities or non - convertible bonds. It only reflects the effect of common stock.

    Diluted EPS on the other hand, takes all convertible securities including convertible preference stock and convertible bonds into consideration in order to measure profitability. It, however, does not also consider non-convertible bonds.

    The answer therefore, is that neither EPS nor Diluted EPS is affected by Non-convertible Bonds

    Non-Convertible Bonds are unsecured bonds or debts that are paid back in cash and cannot be converted to stock. It means, the company who acquires such debt can only pay them back by cash and with the agreed interest rate without an option of conversion to stocks.
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