What is Diluted EPS | Explained in five minutes
Welcome to the series of “Those DAMN terms” in which we try to understand one important FINANCE TERM in the simplest possible manner, that too in five minutes.
Today’s TERM of discussions is DILUTED EPS.
In our previous video, we discussed about BASIC EPS.
Lets understand that diluted EPS OFFERS a better picture of the company’s earnings compared to BASIC EPS. Lets dive into the video to understand the meaning of Diluted EPS.
Please note that Iam explaining this in very simple terms, avoiding technical jargons so that anyone without financial knowledge can get a grasp of the concept.
Key take aways is that, Diluted EPS gives an idea of the company’s earnings if the company were to execute/complete the obligations of issuing shares. Though in an ideaLscenario, the company may not be required to fulfill the obligations ALL AT ONCE, financial analysts imagine the worst case scenario and try to give the investor a clear picture of his/her diluted share of the earnings.
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