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This might be a dumb question. But can someone help me figure this out? This is the DEPS formula from my Roger book:
Net income available to common shareholders
+ (2) Dividends on convertible PS
+ (2) Interest expense saved from convertible bonds- net of tax
+ (3) $0 from Treasury Stock
/ divided by:
Wtd avg CS O/S
+ (2) # shares convertible security is converted into
+ (3) Incremental # shares CS O/S from TS method at avg mkt price2 refers to the if-converted method and 3 refers to the Treasury Stock method. I’m just confused because of the formula presentation like that. Are the two methods completely separate approaches, and using each one would get you the same result? Or do both methods have to be used?
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