Earnings per share (EPS) is a figure you will hear discussed a lot on CNBC.
What is the difference between basic and diluted EPS?
If you use a website to answer this question, please summarize your findings and include the hyperlink as your reference. If you use the textbook, please include the page numbers.
Example 1:(Dont Copy paste the same)
Earning per share is the net income less preferred stock dividends divided by the weighted average common shares outstanding for the period (G-4). To investors, an EPS ratio can serve as an important indicator of a company’s operating value.
Basic EPS is calculated by:
Net income – dividends on preferred stock/weighted average of common shares outstanding during the year
Diluted EPS is calculated by:
Net income – preferred dividends) / (weighted average number of shares outstanding + the conversion of any in-the-money options, warrants, and other dilutive securities) (https://corporatefinanceinstitute.com/resources/knowledge/valuation/diluted-eps-formula-calculation/)
Diluted EPS reflects the impact of additional shares that would be issued if all stock options and convertible securities are converted into common shares. Essentially, presuming the most-extreme case (8-24).
