25% CONVERTIBLE PREFERRED STOCK

6. - UNDERSTANDING INCOME STATEMENTS 1
UNDERSTANDING INCOME STATEMENTS 1
6.25% convertible preferred stock:Preferred dividend / Common shares if converted= (0.0625)($100) / 3.3 = $1.8939Because this is less than basic EPS, this convertible preferred stock is dilutive.8% convertible preferred stock:= (0.08)($100) / 5 = $1.60Warrants:Because the exercise price $38 is less than average share price $52, the warrants are dilutive.Next, determine the number of common shares that would be created by exercise of each dilutive security: