Diluted EPS Formula Template

Over 1.8 million professionals use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets.

Diluted EPS Formula Template

This Diluted EPS Formula template shows you how to compute the diluted earnings per share using information from the income statement and an employee option schedule.

This is what the diluted EPS formula template looks like:

Diluted EPS Formula Template Screenshot

Download the Free Template

Enter your name and email in the form below and download the free template now!

The Diluted EPS formula is equal to Net Income less preferred dividends, divided by the total number of diluted shares outstanding (basic shares outstanding plus the exercise of in-the-money options, warrants, and other dilutive securities).

Diluted EPS Formula:

Diluted EPS = (net income – preferred dividends)  /  (weighted average number of shares outstanding + the conversion of any in-the-money options, warrants, and other dilutive securities)

Why do Investors and Analysts Calculate Diluted EPS?

The reason that analysts and investors calculate diluted EPS is that basic EPS may overstate the actual amount of earnings per share that a common shareholder is entitled to.

Companies frequently have dilutive securities outstanding – like options and warrants – that will increase the total number of shares outstanding when converted.

Since the conversion of options into shares won’t add any additional net income to the business, the increased share count makes the conversion dilutive.

Options may have been granted to employees, for example, that are in-the-money (strike price is below the current market price) but have not been converted yet.  If options are in-the-money, they should be accounted for in a diluted EPS calculation.

More Free Templates

For more resources, check out our business templates library to download numerous free Excel modeling, PowerPoint presentation, and Word document templates.

Analyst Certification FMVA® Program

Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.

 

Financial Analyst certification curriculum

 

A well rounded financial analyst possesses all of the above skills!

 

Additional Questions & Answers

CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

In order to become a great financial analyst, here are some more questions and answers for you to discover:

 

0 search results for ‘