Which of the following statements about antidilutive securities and their effect on EPS are true? (Select all that apply.) Check All That Apply Dilutive securities are ignored when calculating both basic and diluted EPS. Dilutive securities are ignored when calculating both basic and diluted EPS. It is not immediately obvious whether the effect of the conversion of a particular convertible security would be dilutive or antidilutive. It is not immediately obvious whether the effect of the conversion of a particular convertible security would be dilutive or antidilutive. If the effect of the conversion or exercise of potential common shares would be to increase EPS, the related securities are referred to as antidilutive securities. If the effect of the conversion or exercise of potential common shares would be to increase EPS, the related securities are referred to as antidilutive securities. To determine whether convertible securities are dilutive, we can compare the "incremental effect" of the conversion (expressed as a fraction) with the EPS fraction before the effect of any convertible security is considered. To determine whether convertible securities are dilutive, we can compare the "incremental effect" of the conversion (expressed as a fraction) with the EPS fraction before the effect of any convertible security is considered.

It is not immediately obvious whether the effect of the conversion of a particular convertible security would be dilutive or antidilutive.
If the effect of the conversion or exercise of potential common shares would be to increase EPS, the related securities are referred to as antidilutive securities.
To determine whether convertible securities are dilutive, we can compare the “incremental effect” of the conversion (expressed as a fraction) with the EPS fraction before the effect of any convertible security is considered.

Explanation:

The antidilutive securities may be defined as the financial instruments for which an organization possess at a particular point of time that are not in the form of a common stock. When these antidilutive securities are converted into a common stock, it results in an increase in earnings for one share of the organization. Thus the EPS or the earnings per share increases when the the antidilutive securities are converted into the common stocks.

The following effects of the antidilutive securities on the EPS are true :

the effects of conversions of any convertible security are not immediately obvious that it would be dilutive or antidilutive.
when the effect of the conversion or the exercise of any potential common shares is to increase the EPS, then the securities are called as antidilutive securities.
To know if the convertible securities are dilutive or antidilutive, we have to compare its incremental effect with the EPS before any effect of the conversion.