Savoir (6/06)

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    c0712
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    In part (b), there are two financial instruments (convertible loan stock and share options). I don’t see there is ranking working in the answer provided by bpp. Do we need to rank them two?

    Thank you!


    Avatar of MikeLittle
    MikeLittle
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    Normally you would rank in the sequence of “most diluting first” but where there are options and only one other convertible, OPTIONS ARE ALWAYS MOST DILUTING by definition because we are only looking at the “free shares” and they generate no potential extra earnings.

    If there were two loan stock conversions, then we would need to calculate “marginal earnings per share” and then take the most diluting first in the working to check for anti-dilutions


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    c0712
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    Got it. Thank you so much!


    Avatar of MikeLittle
    MikeLittle
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    Welcome

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