I need assistance with calculating basic and diluted earnings per share. I am not understanding what is antidilutive and when to calculate that.

HELP!!

I need the same info. Have you received any responses? :confused:

Hey, I think this is one of the few things I have a clue about. Basic EPS is calculated using the standard formula...
(Net Income - Pref. Dividends) / weighted average number of shares.

The weighted average number of shares is affected by stock splits and stock issues and such throughout the year.

Diluted EPS is a what-if EPS considering that anything that any event that COULD bring down the EPS number WILL HAPPEN. So if there are convertible bonds then possibly the conversion of those bonds would bring down the EPS so this is calculated in diluted EPS regardless of whether it happens or not.

So each dilutive item's (convertible bonds, stock options, warrants etc) EPS should be calculated individually and then included with Basic EPS. So if let's say that the conversion of bonds increases net income by $100 and the conversion increases the number of shares by 50 then there is an EPS of $2.00/sh. Obviously if Basic EPS is less than that - say $1.00/sh - then the convertible bonds are anti-dilutive and should not be used in the calculation of diluted EPS because it increases the EPS amount. When figuring out diluted EPS, remember, you want to report the lowest possible amount given the information. Hope this helps