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| ''Financial ratio analysis - performance ratios.'' | | ''Economics''. |
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| (Diluted EPS).
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| Diluted earnings per share are calculated as:
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| Profit attributable to ordinary shareholders '''÷''' Diluted weighted average number of shares in issue during the period.
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| Profit after tax attributable to ordinary shareholders is often known as 'earnings' or 'net profit'.
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| <span style="color:#4B0082">'''''Diluted EPS example'''''</span>
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| Earnings for the period are £40 million and the diluted number of shares is 52 million.
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| EPS = £40m / 52m
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| = £0.77 (= 77 pence)
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| 'Diluted' earnings per share are calculated by adjusting the earnings and number of shares for the effects of 'dilution' of the current ordinary shareholders' entitlements.
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| 'Dilution' is defined in IAS 33 as:
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| The reduction in EPS assuming that the number of shares increases because:
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| #Convertible instruments are converted,
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| #Options or warrants are exercised, or
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| #Ordinary shares are issued on the satisfaction of specified conditions.
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| Relevant accounting standards include IAS 33 and Section 1 of FRS 102.
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| | The theory that consumption of each additional unit of a product or service results in the marginal utility decreasing. |
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| == See also == | | == See also == |
| * [[Convertible debt]] | | * [[Marginal utility]] |
| * [[Dilution]] | | * [[Utility]] |
| * [[Earnings]]
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| * [[Earnings per share]]
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| * [[IAS 33]]
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| * [[FRS 102]]
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| * [[Option]]
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| * [[Profit attributable to ordinary shareholders]]
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| * [[Warrant]]
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| [[Category:Accounting,_tax_and_regulation]]
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| [[Category:Corporate_finance]]
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Revision as of 20:01, 11 August 2013
Economics.
The theory that consumption of each additional unit of a product or service results in the marginal utility decreasing.
See also
