Diluted EPS (Earnings Per Share)

Description
In order to calculate diluted EPS, you must start with basic EPS and then remove the adverse effect of all dilutive securities outstanding during the period.

1. Identify all potential dilutive securities: options, convertible bond, convertible preferred stock, warrants etc.
2. Compute the basic EPS. The effect of potentially dilutive securities is not included in the computation.
3. Determine the effect of each potentially dilutive security on EPS to see whether it is dilutive or not.
4. Exclude all anti-dilutive securities from the calculation of EPS.
5. Use basic and dilutive securities to calculate diluted EPS.

This PDF guide discusses all you need to know about Diluted EPS.

Here is a brief overview of the content:
---> What Diluted EPS is
---> Effect of convertible debt on diluted EPS
---> Effect of convertible preferred stock on diluted EPS
---> Effect of options & warrants
---> Colgate analysis
---> How useful is it to investors?