Which statement is correct?
A)Diluted EPS decreases the comparability of financial statements.
B)Diluted EPS decreases the understandability of financial statements.
C)Diluted EPS addresses the moral hazard information asymmetry.
D)Diluted EPS is calculated in the same manner as basic EPS.

Question

Quizplus · Accepted Answer

Diluted Earnings Per Share (EPS) addresses the moral hazard information asymmetry by providing a more comprehensive picture of a company's potential earnings per share, considering all convertible securities. This transparency helps reduce the information gap between company insiders and external investors.

Which Statement Is Correct