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sorry
the difference between basic and diluted eps
and when we are calculating the share options diluted eps, why do we only take the free shares as there are more which were issued
and lastly
Preference dividends are not allowed as a tax deductible expense so the saving there is purely the … preference dividendBut why is it not tax deductiobe as it is a expense for company
“But why is it not tax deductiobe as it is a expense for company” – it’s not deductible because it’s not an expense. It’s an appropriation of profits paid to the preference shareholders – very like a dividend on ordinary shares is also not an expense
You ask “(what’s) the difference between basic and diluted eps” – basic earnings per share shows how much the company has earned for each share
Diluted earnings per share shows what that figure would be in the worst way if all the dilutions that could take place in the future had happened this year
We only consider the ‘free’ shares in the options dilution calculation because the non-free shares are calculated as being issued at full market price and we already know (from reading the free course notes) that shares issued for full market price are non-diluting
OK?
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