Which equation correctly calculates the new pro forma EPS?

The correct method for calculating the new pro forma earnings per share (EPS) involves incorporating synergies into the net income of the combined entities involved in a merger or acquisition. Synergies represent the expected additional income or cost savings realized as a result of the merger.

By adding synergies to the net income, you reflect the enhanced earning capability of the combined company. This increase in net income, when divided by the total number of outstanding shares, provides a more accurate representation of the earnings available to each share of stock. Therefore, the formulation that combines net income with synergies and then divides by the outstanding shares effectively shows how the merger could enhance shareholder value through higher earnings per share.

The other potential answers do not correctly represent the fundamental financial principles of calculating pro forma EPS following a merger. The option that states to subtract synergies could imply a decrease in income instead of acknowledging how they positively impact net income in the context of a merger. Another alternative that involves adding total debt instead of synergies doesn't consider the operating efficiencies or revenue growth that synergies provide, thus misrepresenting the true earning potential of the business.