Question

if convertible preferred stock is used to compute diluted earnings per share, how will the numerator of the diluted eps equation need to be adjusted compared to the numerator of the basic eps equation?

Answer 1

The convertible stock's yearly preferred dividend should be reinstated.

What is the stock price?

A share price is the price of a single share of a company's salable equity shares. In layman's terms, the stock price is the largest amount of money someone is willing to pay for the stock or the lowest amount for which it can be purchased.

Diluted earnings per share (EPS) is calculated by taking a company's net income, deducting any preferred dividends, and dividing the result by the weighted average number of outstanding shares plus dilutive shares (convertible preferred shares, options, warrants, and other dilutive securities).

Therefore, The stock's yearly preferred dividend should be reinstated.

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