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hi mike
for diluted eps, what is the difference between basic
and when for loan stock when we add interest savings why do we net off with tax
whereas with convertible preference dividends we dont add anything? why is that?
When you say “for diluted eps, what is the difference between basic
” there has to be something else for there to be a difference between …. what?Loan interest is a tax allowable expense so the saving in no longer having to pay loan interest will increase the profits and that will attract extra taxation
So the net saving is the loan interest net of the tax that will have to be paid on the additional profits as a result of no longer having that tax deductible interest
Preference dividends are not allowed as a tax deductible expense so the saving there is purely the … preference dividend
Is that OK?
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