In order to calculate diluted earnings per share,the net profit attributable to ordinary shareholders and the weighted average number of shares outstanding should be adjusted for the effects of all dilutive potential ordinary shares.

Question

Quizplus · Accepted Answer

This statement is true as per the generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). Dilutive potential ordinary shares may include stock options, warrants, convertible bonds, and convertible preferred stock. These instruments have the potential to dilute the earnings per share (EPS) and hence, should be factored in while calculating the diluted EPS.

In Order to Calculate Diluted Earnings Per Share,the Net Profit