Diluted earnings per share (eps) are found by adjusting basic eps for the impact of converting all convertibles and exercising all warrants and options that would have dilutive effects on the firm's earnings.

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Diluted EPS takes into account the potential dilution from convertible securities that could be converted into common shares, as well as options and warrants that could be exercised and result in an increase in the number of shares outstanding. The calculation adjusts the basic EPS to provide a more accurate picture of a company's earnings per share.

Diluted Earnings Per Share (Eps) Are Found by Adjusting Basic