Diluted Earnings per Share (Diluted EPS)

Corporate Finance Financial Statements Financial Terms Dictionary

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Diluted earnings per share (diluted earnings per share) calculates a company’s earnings per share if all convertible securities were converted.

Dilutive securities are not ordinary shares, but securities that can be converted into ordinary shares.
The conversion of these securities reduces earnings per share, so diluted earnings per share are always lower than earnings per share.
Dilutive EPS is considered a conservative metric as it indicates the worst-case scenario in terms of EPS.