What is the Difference Between Basic EPS and Diluted EPS?
🆚 Go to Comparative Table 🆚The difference between basic EPS and diluted EPS lies in the number of shares they take into account. Here are the key differences between the two:
- Basic EPS: This is calculated by dividing a company's net income after taxes by its weighted average shares outstanding during a specific period. It only takes into account the outstanding common shares of the company.
- Diluted EPS: This account
On this pageWhat is the Difference Between Basic EPS and Diluted EPS? Comparative Table: Basic EPS vs Diluted EPS
Comparative Table: Basic EPS vs Diluted EPS
Here is a table comparing the differences between Basic EPS and Diluted EPS:
Feature | Basic EPS | Diluted EPS |
---|---|---|
Definition | Basic earnings of the company per equity share | Revenues of the company per convertible share |
Importance | Less significant to investors as it does not include convertible shares | More significant to investors |
Calculation | Calculated by dividing a company's net income after taxes by its weighted average number of outstanding shares | Accounts for all potential dilution that could occur from stock-based compensation, warrants, convertible securities, and other dilutive instruments |
Scenario | Suitable for smaller companies | Preferred for bigger corporations |
In summary, Basic EPS is calculated by dividing a company's net income after taxes by its weighted average number of outstanding shares, while Diluted EPS accounts for all potential dilution that could occur from stock-based compensation, warrants, convertible securities, and other dilutive instruments. Diluted EPS is considered more significant to investors as it provides a more comprehensive view of potential per-share profitability.
Read more:
- Basic Earnings Per Share vs Diluted Earnings Per Share
- Dividends vs Earnings Per Share
- EBIT vs EBITDA
- Dividend vs Dividend Yield
- Common Stock vs Retained Earnings
- Dilution vs Dilution Factor
- Stock Dividend vs Stock Split
- EBITDA vs Operating Income
- Dilution vs Concentration
- Preferred Stock vs Common Stock
- Weak Acid vs Dilute Acid
- Gross Margin vs EBITDA
- Cost of Capital vs Cost of Equity
- Debt vs Equity
- Debt Ratio vs Debt to Equity Ratio
- Derivatives vs Equity
- Cost of Equity vs Cost of Debt
- Ordinary vs Qualified Dividends
- Bonus Share vs Stock Split