Diluted earnings per share should be a more conservative (lower) figure than basic earnings per share.

Question

Quizplus · Accepted Answer

Diluted earnings per share take into consideration the potential impact of dilutive securities such as stock options and convertible bonds, which could result in an increase in the number of outstanding shares. This typically results in a lower figure for earnings per share compared to basic earnings per share, making it a more conservative measure.

Diluted Earnings Per Share Should Be a More Conservative (Lower)