Final answer:
The Treasury Stock Method is used to calculate the impact of potential dilution on EPS for stock options and other securities. The "If Converted" Method calculates the potential impact of convertible securities on EPS. The Straight-Up Addition Method is not a specific method for securities.
Step-by-step explanation:
The Treasury Stock Method is used to calculate the impact of potential dilution on earnings per share (EPS) for stock options and other securities that could convert into common stock. This method assumes that the company will use the proceeds from the exercise or conversion of these securities to buy back its own shares in the open market. By doing so, it reduces the potential dilutive effect on EPS. The Treasury Stock Method considers the potential effects of these securities on EPS and provides a more accurate measure of the impact of potential dilution on the company's financial statements.
The "If Converted" Method is used to calculate the potential impact of convertible securities, such as convertible bonds, on EPS. It assumes that these securities are converted into common stock at the beginning of the period or when the average market price of the common stock exceeds the conversion price. By assuming conversion, the method provides a more accurate measure of the potential dilution that could arise from the conversion of these securities.
The Straight-Up Addition Method is not a specific method used for securities. It could refer to the straightforward addition of the number of shares issued by the company or the number of shares held by shareholders. However, without further context, it is difficult to determine the exact meaning of this method in the context of securities.