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What does it mean when EPS is diluted?

Diluted EPS will always be lower than basic EPS if the company anything but common shareholders. The whole point of calculating diluted EPS is to understand what the impact to basic EPS would be if any of the dilutive securities were converted (convertible preferred stock, convertible bonds, or options/warrants).

There are circumstances where basic EPS increases as a result of securities being converted. When basic EPS increases, that means the conversion is antidilutive.


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