What is convertible debenture? What is its effect on EPS?

Answer Posted / 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.

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