What is diluted EPS?

You have put your money into a business. It is natural that you would want to know what's your cut in its profits. EPS (earnings per share) is a helpful metric in that regard, as it represents how much money a company makes per share. It is obtained by dividing a company's net profit by its number of outstanding shares. However, here lies the issue. What if the number of outstanding shares increases? Companies often issue convertible securities (convertible bonds, convertible preferred stocks, employee stock options, warrants, etc.)

This article was originally published on March 14, 2023.