Mortgaging the future?

Earnings per share seems a simple enough construct - the portion of a firm's total earnings available to one share of common stock. Nonetheless, as stock option plans continue to multiply, along with the use of bonds and preferred shares that are convertible into common stock, it is getting har...

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Bibliographic Details
Published in:CA Magazine 2001-09, Vol.134 (7), p.47
Main Authors: Huson, Mark R, Soctt, Thomas W, Wier, Heather A
Format: Article
Language:English
Subjects:
Accounting
Accounting procedures
Convertible bonds
Dilution
Earnings forecasting
Earnings per share
Market prices
Stock options
Stock prices
Stockholders
Treasuries
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Summary:Earnings per share seems a simple enough construct - the portion of a firm's total earnings available to one share of common stock. Nonetheless, as stock option plans continue to multiply, along with the use of bonds and preferred shares that are convertible into common stock, it is getting harder and harder to define just how much of the earnings belong to one share of common stock. Recently, researchers have begun to investigate how accountants incorporate estimates of the effect of options and convertibles when they calculate earnings per share; at the same time, accounting standard-setters have begun to consider some alternatives.
ISSN:0317-6878