Question

A complex capital structure requires? a. a dual presentation of earnings per share b. consists of...

A complex capital structure requires?

a.

a dual presentation of earnings per share
b.

consists of common stock and convertible preferred stock or convertible bonds
c.

applies only when a company has nonconvertible preferred stock or nonconvertible bonds
d.

both a and b
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Answer #1

d. Both a and b

A complex capital structure is one that different forms of securities and has different types of common stock classes. In short, a complex capital structure is the one that consists of anything other than or in addition to common stocks and bonds. Hence, if a company has convertible debt, convertible preferred stocks, etc then the structure is called a complex capital structure.

Such a complex capital structure required a dual presentation of EPS, where presentation is made for each separate class of common share. Such presentations are necessary to adequately inform the financial statement users about the implications and likelihood of any events and to provide worst-case scenarios

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