AFM391 Lecture Notes - Lecture 17: Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM391
• Professor: Robert Ducharme

Document Summary

Eps figures can level the playing field between two companies in the same industry but of u(cid:374)e(cid:395)ual sizes o(cid:396) of co(cid:373)pa(cid:374)ies i(cid:374) diffe(cid:396)e(cid:374)t i(cid:374)dust(cid:396)ies altogethe(cid:396). It s a (cid:373)ajo(cid:396) a(cid:374)alytical to that blends the income statement with the balance sheet to represent historical and future results. It does this through analyzing historical data w what could but not will happen in the future. Convertible on a 1 for 1 basis at . Calculate the impact on weighted avrg # of shares. If a company has a wide spread between basic and fully diluted eps, it can signal of concerns. Lots of warrants/options and very little bank financing. If the market price of an option is less than its option price, it is automatically anti-dilutive and does not factor into fdeps. In a loss year, all instruments will be anti-dilutive: therefore fully diluted = basic eps.