>> Please discuss how the exercise of options affects shareholder equity. <<
Elmer: an increase in the share count due to option exercises does not affect absolute shareholders’ equity (a.k.a. net worth, a.k.a. book value), but share expansion obviously does affect shareholders’ equity per share (a.k.a. book value per share).
If you were buying an entire company, you would be concerned with the valuation of the entire business irrespective of the per-share metrics. But for investors such as ourselves who are buying shares, the per-share financial metrics are the ones that matter most. Regards, Dew
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