Is this a good elimination technique for DEPS/BEPS calc ?

CFA Level I
#1

Hi guys.

Since DEPS can never be > BEPS and even if it is DEPS = BEPS, i used to think that for every DEPS problem I should calculate BEPS. THat’s just wayy too much time.

If in the answer choices, the DEPS we get from our calculation is the LOWEST numerical value of all 3 DEPS answer choices, would it be a good idea to assume that our answer is right and DEPS is NOT more than BEPS because there’s simply nothing lower in the answr choices which would kind of mean DEPS is NOT > BEPS because if it did, then there would have to be a lower value in the answer choices (assuming the DEPS attained is the lowest answer value in the choices) ?

Calculating BEPS for every DEPS to make sure DEPS < BEPS is quite tiring and time consuming.

#2

I’m not sure what you mean. Are you asking that if you get a question saying calculate Diluted Earnings Per Share you wouldn’t check for dilution? Just go through the calculation to find DEPS?

The problem with this is if the question has multiple potentially dilutive securities then some might not be included in the DEPS calculation - and if you don’t check if they are dilutive (DEPS

#3

I did a bad job of explaning.

Suppose the question format is like this:

Find DEPS.

Answer choices:

a) 1

b) 2

c) 3

You did your calculation and you arrived at DEPS = 1. Now you can go ahead and find BEPS to see if DEPS is dilutive, but that’d take some time.

Since you think it’s 1, and if it is 1, since you can’t choose a lower DEPS figure, isn’t that an automatic validation that DEPS is < BEPS ?

I’m trying to find time saving strategies and this is one.

#4

never mind

#5

It’s a valid technique; i.e., it will work when the circumstances meet your criteria.

It may not prove useful; i.e., circumstances may not meet your criteria.

#6

Thank you!