Question

Which of the following methods will affect both the numerator and the denominator of diluted earnings per share?

1) Stock splits
2) Stock dividends
3) Stock repurchases
4) All of the above

Answer 1

All of the methods listed, which include stock splits, stock dividends, and stock repurchases, will affect both the numerator and denominator of diluted earnings per share.

Step-by-step explanation:

Among the methods that will affect both the numerator and the denominator of diluted earnings per share (EPS), the correct response is all of the above. Specifically, this means that stock splits, stock dividends, and stock repurchases each have an impact on the calculation of diluted EPS. Stock splits and dividends change the number of shares outstanding, which affects the denominator. Meanwhile, stock repurchases reduce the number of shares outstanding, influencing both the numerator and denominator as treasury shares cannot be included in the EPS calculation.