When a corporation presents both "basic" and "diluted" earnings per share,basic earnings per share will be the smaller of the two figures.

Question

Quizplus · Accepted Answer

Basic earnings per share (EPS) do not account for the potential dilution of securities that could be converted into common stock, such as options or convertible bonds, whereas diluted EPS does. Therefore, diluted EPS is often the smaller figure because it assumes all dilutive securities are converted to common stock, increasing the share count and potentially decreasing the EPS.

When a Corporation Presents Both "Basic" and "Diluted" Earnings Per