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What is diluted EPS?

Diluted EPS is a calculation that is used with a more complex capital structure. Like basic EPS, the ultimate purpose of the calculation is to compute the company’s earnings per share, however several other types of securities need to be included in the calculation. The other types include convertible securities, convertible debentures, warrants, and stock options.

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    EPS is short for earnings per share. Basic earnings per share (EPS) is a general calculation that can be used as a measurement to quantify the amount of a company’s profit that can be allocated to one share of its stock. Basic EPS is used for entities that issue only common stock. Basic EPS will...