Earnings per Share (EPS)
- “Treasury Stock” method (“as if”).
- Used to calculate (and reduce) the effect of options and warrants on EPS calculations.
- Assume beginning of period or date of issuance, if later.
- Dilutive if market price > option price.
Example: 100 warrants are outstanding for 100 shares of common stock. Option price is $8 per share; average market price is $10 per share. Note: Since the warrants convey the right to purchase shares of stock at a discount they may have a market value themselves.