7. Reporting earnings with warrants and convertibles Investors tend to focus on the bottom line when conducting financial analyses. Thus far, you have calculated earnings per share (EPS) as the net income available to common shareholders divided by the number of common shares outstanding. However, when firms use a lot of hybrid securities, their earnings can be distorted. As a result, a few different methods exist for reporting EPS. Read the following statement, which describes one of these reporting methods: Earnings per share are found based on the assumption that all convertibles and warrants are exercised rather than trying to estimate how many of them are likely to be exercised. Identify which of the reporting methods this statement describes: Basic EPS Diluted EPS Primary EPS