Page 24 - FINAL CFA I SLIDES JUNE 2019 DAY 7
P. 24
Session Unit 7:
24. Understanding Income Statements
LOS 24.h: Describe how earnings per share is calculated and calculate and interpret a company’s
earnings per share (both basic and diluted earnings per share) for both simple and complex capital
structures.
LOS 24.i: Distinguish between dilutive and antidilutive securities and describe the implications of
each for the earnings per share calculation.
• A simple capital structure -contains no potentially dilutive securities; only contains common
tanties
stock, nonconvertible debt, and nonconvertible preferred stock.
• A complex capital structure contains potentially dilutive securities such as options, warrants, or
convertible securities.
• All firms with complex capital structures must report both basic and diluted EPS.
• Firms with simple capital structures report only basic EPS.
