Diluted earnings per share

Diluted earnings per share: basic EPS recalculated as if every convertible bond, option and warrant had already converted into ordinary shares, giving the lowest, most conservative profit-per-share figure.

ByHoang TruongUpdated July 11, 2026

FrameworkIAS 33

See it move

Loading infographic...

A company earns €2,000,000 for ordinary shareholders on 1,000,000 weighted-average shares, giving basic EPS of €2,000,000 ÷ 1,000,000 = €2.00. Its convertible bonds would add 250,000 shares and stop €100,000 of after-tax interest if converted, so diluted EPS becomes (€2,000,000 + €100,000) ÷ (1,000,000 + 250,000) = €2,100,000 ÷ 1,250,000 = €1.68.

Where it fits

SubjectFinancial AccountingAdvancedTopicFinancial Statement Analysis & RatiosAdvanced

The formula

LaTeX

EPS_{dil} = \frac{P + I}{S + D}

Variables

$E P S_{d i l}$: Diluted earnings per share (€ per share)
$P$: Profit attributable to ordinary shareholders (€)
$I$: After-tax interest or preference dividend saved on conversion (€)
$S$: Weighted-average ordinary shares outstanding (shares)
$D$: Dilutive potential ordinary shares (shares)

Recomputes earnings per share as if all dilutive convertible instruments and options had already converted into ordinary shares.