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The 2016 Form 10-K of NetFlix includes the following footnoted information. Use this information to answer the required. The computation of net income per share

The 2016 Form 10-K of NetFlix includes the following footnoted information. Use this information to answer the required.

The computation of net income per share is as follows:

Year ended December 31,

2016

2015

2014

(in thousands, except per share data)

Basic earnings per share:
Net income$

186,678

$

122,641

$

266,799

Shares used in computation:
Weighted-average common shares outstanding

428,822

425,889

420,544

Diluted earnings per share:
Net income$

186,678

$

122,641

$

266,799

Shares used in computation:
Weighted-average common shares outstanding

428,822

425,889

420,544

Employee stock options

9,830

10,567

11,350

Weighted-average number of shares

438,652

436,456

431,894

Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

The following table summarizes the potential common shares excluded from the diluted calculation (in thousands):

2016

2015

2014

Year ended December 31,

(in thousands)

Employee stock options

1,545

517

917


Required:

a.What are the potential sources of dilution of NetFlix’s earnings per share?
b.List two additional dilutive securities (other than those NetFlix includes).
c.NetFlix did not include all outstanding employee stock options in the calculation of diluted net income per share in 2016? Why not? How many options were excluded?
d.Calculate basic EPS for each of the three years.
e.Calculate diluted EPS for each of the three years.

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