Problem: Earnings Per Share Concepts
Indicate which of the following securities would be included in the computation of "basic earnings per share," and which would be included in the computation of "diluted earnings per share." Place a "B" before those which affect only basic EPS, a "D" before those which affect only diluted EPS, a "BD" before those which affect both basic and diluted EPS, and an "N" before those securities which do not affect EPS computations. Assume that, where applicable, the appropriate securities are dilutive.
0. Notes payable.
1. Executive stock options.
2. Convertible bonds.
3. Cumulative, nonconvertible preferred stock.
4. Warrants to purchase additional common shares.
5. Common stock.
6. Nonconvertible debenture bonds.
7. Convertible preferred stock.