The firm had 10 million common stocks in issue for the year ending December 31 2022. On the 1 January 2023 it had issued $2 million of 6% convertible debentures, each $5.00 of debentures can be converted into four common shares on the 1 of January at the option of the holder of the debenture.

The firm had profit after tax for the year ended December 31, 2022, of $1 850 000. The firm pays tax at 30% for the year ended.

Required:

1. Calculate the Basic and diluted EPS for the year 2022

ii. Outline the need to disclose a diluted EPS figure and on the relevance of this to the shareholders