What is convertible debenture? What is its effect on EPS?
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Answer / vishnu_mba87
Convertible debenture is one which can be converted into an
equity share after a chosen time period.
EPS is ratio of Profit After Taxes to No of Shares
Outstanding.
If a convertible debenture is converted into 2 equity
shares, then no of outstanding shares will increase which
leads to decrease in EPS
Is This Answer Correct ? | 21 Yes | 1 No |
Answer / lakshman001
Those debentures which can be converted into equity shares
after a certain period are known as convertible debentures.
As the debentures are converted into equity, the no. of out
standing shares increase and thus the EPS gets reduced.
Is This Answer Correct ? | 8 Yes | 3 No |
Answer / peter athanas
convertible debenture is the type of debenture which the
company give the right or option to the holder to change
from debenture form to ordinary shareholder in an agreed
number of shares to be exchanged per debenture.
The effect of convertible debenture to the EPS is that it
diluted the EPS (the EPS will decrease because of the
increase of the number of shares which were not contributed
any thing to the profit for the year).
Is This Answer Correct ? | 2 Yes | 1 No |
Answer / prasanna
Convertible debentures can be converted into equity shares
of the issuing company after a predetermined period of
time.
When the Convertible securities are exercised the number of
outstanding equity shares increases, and thus the EPS
decreases. 'Diluted Earnings Per Share' or 'Diluted EPS'
is a performance metric that is used to gauge the quality
of a company's EPS if all convertible securities were
exercised.
Is This Answer Correct ? | 2 Yes | 1 No |
Answer / vasantha koteswara rao
it is the asset it can be converted into equity shares
preference shares etc
Is This Answer Correct ? | 0 Yes | 0 No |
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