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 diluting effects on the firm's earnings.

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Diluted EPS takes into account the potential dilution of earnings per share from securities such as options, warrants, and convertible bonds. It adjusts basic EPS by assuming that all these securities have been exercised or converted into common stock, which can potentially dilute the earnings per share.

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