Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 32

A financial analyst notes that Collier Corporation's earnings per share have been rising steadily for the past five years. The analyst expects the company's net income to continue to increase at the same rate as in the past. In forecasting future basic earnings per share, what special risk should the analyst consider if Collier's basic earnings are significantly larger than its diluted earnings?