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Fully diluted arithmetic

Article Abstract:

A quirk in the conventional method for calculating earnings per share (EPS) can lead to an overstated EPS figure. This calculation error can become particularly troublesome when preparing the financial statements of companies with convertible obligations outstanding. Examples of how significant errors can arise in the calculation of a fully diluted EPS are presented. The computational quirk is traced to the lack of an integrated, coordinated approach to the treatment of financial statements. A fundamental rethinking of current management practice is proposed to remedy the problem.

Accounting and auditing, Financial statements, Earnings per share

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Linking the shop floor to the top floor

Article Abstract:

Manufacturing performance can be measured using a framework based on two basic assumptions, namely: that financial performance and manufacturing performance can be linked, and that linkage of all manufacturing measures should be used to ensure a constancy of purpose in the identification of problem areas. Steps in the establishment of a manufacturing measurement framework include: the definition of critical success factors, the measurement of these factors at each management level, their linkage to financial measures, and the design of an integrated measurement system.

Measurement, Cover Story, Industrial efficiency, Economic efficiency, Production management

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