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Can you explain the term diluted EPS?

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Question added by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER
Date Posted: 2016/11/26
Abde Saeed
by Abde Saeed , Senior Accountant , Al Hejjen Group

Diluted EPS is a performance metric used to gauge the quality of a company's earnings per share  if all convertible securities were exercised. Convertible securities are all outstanding convertible preferred shares, convertible debenturesstock options (primarily employee-based) and warrants. Unless the company has no additional potential shares outstanding, which is a relatively rare circumstance, the diluted EPS will always be lower than the simple EPS.

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