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    hillman2's Avatar
    hillman2 Posts: 1, Reputation: 1
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    #1

    Nov 30, 2010, 09:04 PM
    Why is diluted EPS always equal to or less than basic EPS?
    Just Looking's Avatar
    Just Looking Posts: 1,610, Reputation: 480
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    #2

    Nov 30, 2010, 09:16 PM

    EPS is earnings divided by shares. Basic EPS uses the shares actually issued - i.e. current shares. Diluted EPS uses the shares that could potentially be issued if you count current shares, plus stock options, warrants, convertibles, and other potential sources of dilution that were currently exercisable were invoked. Diluted shares will always be a larger number than current shares, or equal if none of these things exists.

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