[thebusyone]

Hi all,

Quick question about diluted EPS. There are different convertible securities that can dilute EPS: options and warrants, bonds, and preferred stock. I know that we should not apply instruments that have an anti-dilutive effect. But what EPS should I compare the convertible EPS to? I mean, should I compare each converted EPS (converted bond EPS, preferred stock EPS) to the original EPS, or should I compare each EPS in a sequential manner (compare options and warrants EPS before the bond EPS and then preferred stock EPS)?

Does my question make any sense?

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[ThreeLittleBirds]

I think you would compare the dilution ratio of each convertible security to the original basic EPS.

However, unless you get a SIM on this subject, I don't think you'll have multiple securities to compare in a MC question.

[Author]

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