Basic EPS vs Diluted EPS | Find out the Best Differences!

In this video on Basic EPS vs Diluted EPS, we will go through each metric and try to make a comparative analysis between them.

𝐃𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐁𝐞𝐭𝐰𝐞𝐞𝐧 𝐁𝐚𝐬𝐢𝐜 𝐄𝐏𝐒 𝐚𝐧𝐝 𝐃𝐢𝐥𝐮𝐭𝐞𝐝 𝐄𝐏𝐒
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These both are profitability metrics of a business.
Basic EPS measures how much a business earns per share without going much into any other detail.
Whereas, Diluted EPS, on the other hand, takes convertible securities into account to calculate earnings per share.

In layman’s terms, the basic difference between basic EPS and diluted EPS is that in diluted EPS it is assumed that all the convertible securities will be exercised.

𝐊𝐞𝐲 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞𝐬 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐛𝐚𝐬𝐢𝐜 𝐄𝐏𝐒 𝐚𝐧𝐝 𝐝𝐢𝐥𝐮𝐭𝐞𝐝 𝐄𝐏𝐒
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1. Basic Earnings per Share (EPS) is a simple measure of profitability. Whereas, Diluted Earnings per Share (EPS), on the other hand, is a complex measure.

2. We can calculate Basic Earnings per Share (EPS) by just deducting the preferred dividend from the net income and then by dividing with outstanding equity shares. Whereas, Diluted Earnings per Share (EPS)can be calculated by adding net income, convertible preferred dividend, and debt interest and then dividing the sum by outstanding shares plus all convertible securities of the firm.

3. Basic Earnings per Share (EPS) is used for companies which have simple capital structure. Whereas, Diluted EPS is used for companies which have complex capital structure.

4. Basic EPS is always higher than diluted EPS

To know more about Basic EPS vs Diluted EPS, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞: https://www.wallstreetmojo.com/basic-eps-vs-diluted-eps/

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Видео Basic EPS vs Diluted EPS | Find out the Best Differences! канала WallStreetMojo