Diluted earnings per share
Earnings per share calculated as if every programme granting a right to receive shares had already been exercised.
Formula
\text{Diluted EPS} = \frac{\text{Profit to shareholders}}{\text{Shares including potential}}The denominator includes shares that would appear on exercise of option programmes and convertible instruments. The numerator is profit attributable to owners of the parent.
How to read the number
Shows what share of the profit stays with today's shareholder once the shares promised to others appear.
When the metric lies
Dilution is not cancelled by the shares not having been issued yet: the right is already granted, and the company cannot withdraw it unilaterally.
Also known as: diluted eps