Basic EPS vs Diluted EPS | EXPLAINED
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P1: I’m pretty sure these companies do not spill water on their earnings, so what on earth is this Diluted EPS?
P2: you need classes for both- jokes & investing. Anyway, coming to your question-
Apart from the common shares that a company has, it can dilute its convertible securities like bonds, warrants, etc. into common shares.
Now if the securities are diluted into common shares, the number of outstanding shares increases, reducing the basic EPS. This reduced EPS is known as the diluted EPS. [ show the formula on screen & how increasing denominator, decreases the resulting number]
Diluted EPS is a more conservative metric as it takes into account all the possibilities of common shares.
P1: Ohh, thanksss for the info, where can I get all this information?
P2: You can research about any company on Tickertape. The link is in bio.