Diluted Share

Diluted share is a term used in reporting earnings per share, as in ‘earnings per diluted share’. Few companies have complex reporting structures with securities that have the potential of becoming common shares. Such companies must report earnings on both ‘basic’ (non-diluted) and diluted share basis. Computing earnings on a diluted share basis involves consideration of options, warrants, contingent shares, and convertible securities. This increases the weighted average of outstanding shares upon which diluted share earnings are computed.

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