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Diluted EPS formula

June 29, 2012
  • Diluted EPS = {[Net Income – Preferred Dividends] + [Convertible Preferred Dividends] + [Convertible Debt Interest](1 – t) }/ [Weighted Average Shares] + [Shares From Conversion of Preferred Shares] + [Shares From Conversion of Debt] + [Shares Issuable from Stock Options]
  1. Arthur permalink

    Your parentheses are off. The formula should look more like:
    Diluted EPS = [(Net Income – Preferred Dividends) + (Convertible Preferred Dividends) + (Convertible Debt Interest)(1 – t)] / [(Weighted Average Shares) + (Shares From Conversion of convertible Preferred Shares) + (Shares From Conversion of convertible Debt) + (Shares Issuable from Stock Options)]

    • Damn!

      I typed out 500 plus cards, a typo is totally a possibility. It is also possible I just wrote it down wrong years ago late at night. I’ll compare your suggestion with the original card and fix it. Thanks for spotting this.

  2. Arthur permalink

    Thanks for putting these together.

  3. It is definitely wrong. I found the original flashcard. The good news is this formula does not appear to be on Level 2, the bad news Level 2 has much more and worse formulas.

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