NO.PZ2019120301000040
问题如下：
Question
The following financial information is available at the end of the year.
The diluted EPS (earnings per share) is closest to:
选项：
A.$3.08.
B.$2.93.
C.$2.91.
解释：
Solution
C is correct. The convertible preferred shares are anti-dilutive, as shown in the following table. Therefore, the diluted EPS is the same as the basic EPS, $2.91.
* Exceeds Basic EPS; Series B is anti-dilutive and is thus not included.
A is incorrect. It ignores the Series A dividends and incorrectly includes the anti-dilutive effect of converting the Series B shares.
From the table:
Earnings to Common = 1,000,000 (ignores Series A, converts)
Common shares outstanding = 325,000, as per table with conversion of convertible
EPS = $1,000,000/325,000 shares = $3.08/share
B is incorrect. It includes the conversion of the convertible securities, which are anti-dilutive.
Earnings to Common = 1,000,000 (ignores Series A, converts)
Common shares outstanding = 325,000, as per table with conversion of convertible
EPS = $1,000,000/325,000 shares = $3.08/share
