Diluted earnings per share - diluted eps

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apari (Querist)
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10 March 2012 Sir, i've quite confused about Diluted Earnings Per Share - Diluted EPS. Please can anybody explain me through an example?, it's urgent.

Ankur Garg

Ankur Garg (Expert)
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10 March 2012

Diluted earnings per share is earnings per share that fully reflects the impact the firm's dilutive securities (eg, convertible bonds) may have on earnings per share. Diluted earnings per share is distinguished from basic earnings per share, both of which are computed by dividing net income by the weighted average number of outstanding shares. But only diluted earnings per share assumes the exercise of stock options and warrants, and the conversion of convertible bonds and preferred shares, in computing outstanding shares. Because diluted earnings per share entails spreading net income over more outstanding shares, the additional equity dilutes (ie, reduces) earnings on a per-share basis. Diluted earnings per share is thus the more conservative measure of earnings per share.

apari

apari (Querist)
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12 March 2012 Now i'm clear about it. Thank you very much Ankur sir.

Ankur Garg

Ankur Garg (Expert)
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12 March 2012 You are always welcome...
Keep sharing ur doubts...

Rgds

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