When computing diluted earnings per share, which of the following will not be considered in the calculation? A. Dividends paid on common stock. B. The weighted average common shares. C. The effect of stock splits. D. The number of common shares represented by stock purchase warrants.

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1 October, 11:47

When computing diluted earnings per share, which of the following will not be considered in the calculation? A. Dividends paid on common stock. B. The weighted average common shares. C. The effect of stock splits. D. The number of common shares represented by stock purchase warrants.

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Henry · Answer 1

Answer: Option D

Explanation: Diluted EPS is a measure used to assess the performance of the earnings per share (EPS) of a corporation when all convertible investments have been performed.

All outstanding convertible preferred stocks, convertible debentures, stock grants, and warrants are convertible assets.

While computing diluted earnings dividend are added and weighted average shares are used in denominator and stock splits also have indirect effect as it increases the number of average shares.