In accretion/dilution analysis, pro forma earnings per share are typically projected for which years?

• A. FY+1 and FY+2
• B. Current year only
• C. FY-1
• D. Year 0

Answer: (A)

In accretion/dilution analysis, the focus is on how the combined company’s earnings per share will look after the deal closes, so you compare post-transaction EPS to the pre-deal baseline. The pro forma EPS are typically projected for the next two fiscal years after the close. This two-year horizon gives a forward-looking view that captures the initial impact of the deal—cost synergies, financing structure, and any one-time items—without getting mired in mid-year timing quirks or too far into the future. Projecting only the current year wouldn’t reflect the post-close economics, and looking at the past or at the closing year wouldn’t show the path the deal actually unfolds. Hence, the standard practice is to project EPS for the next two full fiscal years after the close.