QUESTION 1. Many believe that earnings per share is crucial to most financial statement users. Together with earnings, it is also the commonly reported financial statistic about a company's yearly activities. Discuss the following: a. If a convertible debenture exists, when is it considered in calculating EPS? Why? b. In applying the treasury stock method, why must the company first pretend to use the funds to repurchase common shares for the treasury? c. If a 10% stock dividend is issued halfway through the year, how many additional shares are added to the denominator of the EPS calculation? Does the answer change if the same number of shares is issued for cash? Why? d. When would stock options be antidilutive? e. How do we report antidilutive securities? And why? f. Why are multiple security holdings of potentially dilutive securities ranked? why is this useful? g. What would happen if we did not treat stock dividends and stock splits in a retroactive manner? h. Discuss why you should ask for stock options as part of your compensation package if you work at a start-up.