EXERCISE 6–16A Publicly traded companies are required to report earnings per share data on the face of the income statement.

Required:

Compare and contrast basic earnings per share with diluted earnings per share for each of the following:

a. The effect of dilutive stock options and warrants on the number of shares used in computing earnings per share.

b. The effect of dilutive convertible securities on the number of shares used in computing earnings per share data.

c. The effect of antidilutive securities in computing earnings per share.