Potential ordinary shares are considered dilutive when their conversion would result in earnings per incremental share being less than basic EPS.

Question

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Dilutive potential ordinary shares are those that can affect the calculation of earnings per share (EPS) by increasing the number of outstanding shares. They are considered dilutive when their conversion would result in a decrease in EPS or in a higher amount of dilution of existing shareholders. In such cases, the diluted EPS is usually presented along with the basic EPS to provide a more accurate picture of the company's earnings per share.

Potential Ordinary Shares Are Considered Dilutive When Their Conversion Would