Question

Which statement is correct about complex capital​ structure? A.A complex capital structure includes potentially dilutive securities....

Which statement is correct about complex capital​ structure?

A.A complex capital structure includes potentially dilutive securities.

B.A complex capital structure excludes potentially dilutive securities.

C.A company with a complex capital structure calculates only basic EPS.

D.EPS applies only to a company with a complex capital structure

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Answer #1

A complex capital structure that contains securities rather than solely offering a single class of securities like straight debt (eg bank loan) and stock

These securities can include stock options , preferred stock , convertible bonds , etc.

A dilutive security means it has the potential to become a part of the shareholding of the company. Thus , some day it may dilute ( i.e reduce) the ownership stake of other share holders.

In such firms a diluted eps ( EPS which takes into account the financial effect of such conversions).

Thus option B is the correct answer

Thanks, if you have any doubts please leave a comment and let me know

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