Diluted earnings per share measures profit per share of outstanding common stock, but also takes into consideration which four of the following?Multiple select question.preferred stocktotal liabilitiesconvertible debt securitiesstock optionscurrent assetswarrants
Question
Diluted earnings per share measures profit per share of outstanding common stock, but also takes into consideration which four of the following?Multiple select question.preferred stocktotal liabilitiesconvertible debt securitiesstock optionscurrent assetswarrants
Solution
The four considerations for diluted earnings per share are:
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Preferred Stock: This is a type of equity security that has properties of both an equity and a debt instrument and is higher ranking than common stock.
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Convertible Debt Securities: These are bonds or notes issued by a company that the holder can convert into a specified number of shares of common stock in the issuing company.
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Stock Options: These are contracts that grant the holder the right, but not the obligation, to buy or sell a stock at a specified price within a specific period.
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Warrants: These are derivatives that give the right, but not the obligation, to buy or sell a security—most commonly an equity—at a certain price before expiration.
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