Diluted EPS Calculator

How it is calculated

Diluted earnings per share is (NI − PD) / (S + D), where NI is net income, PD preferred dividends, S the weighted average common shares outstanding, and D the number of extra shares that options, warrants or convertibles would add. Basic EPS, shown beside it, is (NI − PD) / S. Money fields are in the same currency, shares are plain share counts, and the answer is shown per share in dollars to two decimals. When earnings for common holders are negative, D is left out and diluted EPS equals basic EPS: extra shares would only shrink the loss per share, so GAAP (ASC 260) and IFRS (IAS 33) treat them as anti-dilutive. You supply D yourself: the tool does not run the treasury stock method or add back convertible interest. Preferred dividends and dilutive shares may be left empty (treated as 0) but cannot be negative, and shares must be above zero.

Common mistakes

• Entering the total number of options or warrants as dilutive shares. Only the net new shares count, after the treasury stock method, which assumes the exercise money buys back shares at the average price.
• Using year-end shares instead of the weighted average for the period. If shares were issued or bought back during the year, the average differs from the closing count.
• Forgetting preferred dividends. Preferred holders are paid first, so they are subtracted from net income; leaving the field empty makes both EPS figures look higher.
• Mixing units, such as net income in millions and shares in single units. Express both in the same scale or the per-share value will be off by a factor of a million.
• Assuming diluted is always below basic. With a net loss the order flips: a loss of 2,000,000 on 10,000,000 shares and 800,000 dilutive shares gives basic -$0.20 and diluted -$0.19, and accounting rules generally exclude such anti-dilutive shares.