Question
Explain the concept of dilution and what diluted EPS is trying to measure? Accountants computing diluted EPS are required to consider the effect on both
Explain the concept of dilution and what diluted EPS is trying to measure? Accountants computing diluted EPS are required to consider the effect on both net income and shares outstanding of events that may or may not happen. Some commentators argue that accountants should not be involved in speculating about the possible exercise of stock options or the conversion of securities in the future. They further argue that basic EPS is based on historical information and should be the only EPS information provided in the financial statements. Do you agree? Why?
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