Fully Diluted EPS Definition

Fully diluted eps? – Definition

Fully Diluted EPS is the net income available to common shareholders as calculated by the weighted average number of common shares outstanding, plus all dilutive securities, whether or not they are considered common stock equivalents.

How to calculate Fully Diluted EPS?

Fully diluted EPS is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding plus all dilutive securities, whether or not they are considered common stock equivalents. The purpose of presenting fully diluted EPS is to show the worst possible case, which assumes that all the dilutive securities were converted. Thus, present and potential investors can see what their earnings per share would be, assuming maximum dilution.

Formula

The formula to calculate fully diluted EPS is:
Fully-diluted-EPS-Formula
Although the numerator in both cases represents net income available to common shareholders, the actual amounts are likely to be different.