Diluted EPS shows how much profit belongs to each potential share after every option, warrant and convertible bond is exercised. U.S. public firms must report it in every 10-Q and 10-K, and 99 % of S&P 500 companies already comply (FactSet Earnings Insight, 2023).
Diluted Earnings per Share Calculator
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How to use the tool
Net Income: Type the period’s profit after tax. Try 60 000 000 or 210 000 000.
Average Shares Outstanding: Enter the weighted-average common shares. Try 18 000 000 or 43 500 000.
Other Convertible Instruments: Add all shares that could be issued from options, warrants or convertibles. Try 3 200 000 or 8 700 000.
Press “Calculate” to see Diluted EPS rounded to two decimals.
Diluted EPS must appear on the face of the income statement for public entities (FASB ASC 260-10-45-2, 2023).
SEC Regulation S-X Rule 3-20 prescribes the treasury-stock and if-converted methods (SEC, 2023).
Median option-related dilution in the S&P 500 equalled 2.4 % in 2021 (JP Morgan Equity Derivatives Outlook, 2022).
Average U.S. convertible-bond conversion premium ran 32 % during 2022 (BofA Global Research “Convertibles Review”, 2023).
FAQ
What is diluted EPS?
Diluted EPS divides net income by all shares that could exist after conversion of options, warrants and convertible securities (Investopedia, https://www.investopedia.com/diluted-eps).
How does it differ from basic EPS?
Basic EPS uses only current common shares, while diluted EPS adds potential shares, giving a lower, more conservative figure (CFA Institute, 2020).
Why does dilution matter to you?
Dilution lowers each share’s claim on earnings, affecting valuation models such as P/E and discounted cash flow (Damodaran, 2021).
Which securities are considered dilutive?
Stock options, restricted stock units, warrants, convertible preferred shares, and convertible bonds all count when they reduce EPS (SEC Staff Accounting Bulletin 120, 2022).
When is a security anti-dilutive?
If converting the instrument would raise, not lower, EPS, it is anti-dilutive and excluded from the calculation (ASC 260-10-45-3, 2023).
Can diluted EPS be negative?
Yes. When a company reports a net loss, both basic and diluted EPS will be negative because the numerator is below zero (Kieso et al., 2022).
How often should you update diluted EPS?
Public companies recalculate every quarter for 10-Q filings and annually for 10-K statements (SEC Form 10-Q Instructions, 2023).
What does the standard say about disclosure?
“All public entities shall present basic and diluted per-share amounts on the face of the income statement” (ASC 260-10-45-2).
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