Is Dunphy suggestion on Imaginary Company EPS justifiable

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Reference no: EM132901744

Question - The Bank of MF is a California-based equity investment consulting company. The company primarily provides advises to both institutional and individual investors. The company is specialized in fundamental analysis that involves collecting and evaluating the accounting statements of publicly traded companies.

Alex Dunphy is an intern of financial analysts at the Bank of MF. She is calculating the Earnings Per Share of Imaginary Company in 2020. She notices the company never issued any dilutive financial instruments and yet issued 1,000 new common shares in 2020. Therefore, Dunphy suggests the company's basic EPS will be smaller than its diluted EPS in 2020.

Required - Is Dunphy's suggestion on Imaginary Company's EPS justifiable? Why?

Reference no: EM132901744

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