Diluted Earnings Per Share
Potential Common Shares
Diluted EPS considers securities that could become common shares in the future, such as stock options, warrants, convertible bonds, and convertible preferred stock. It presents the lowest possible earnings per share if all dilutive securities were converted.
- Convertible bonds.
- Convertible preferred stock.
- Employee stock options.
- Stock warrants.
Note
Only dilutive securities are included. Antidilutive securities are excluded because they would increase EPS.
Summary
Diluted EPS provides a conservative measure of earnings available per share after considering potential future share issuances.