acalculator

What is my EPS?

Enter net income, any preferred dividends and the weighted average number of common shares. Add the shares that options, warrants or convertibles would create to see diluted EPS too.

Your numbers

600 shares for 3 months and 1,600 for 9 months is 600 × 3/12 + 1,600 × 9/12 = 1,350 shares.
Basic EPS
$3.75

Net income of $35,000.00, less any preferred dividends, over 8,000 weighted shares gives basic EPS of $3.75 and diluted EPS of $3.75.

Diluted EPS
$3.75
Earnings to common stockholders
$30,000.00

Basic EPS: $3.75. Net income of $35,000.00, less any preferred dividends, over 8,000 weighted shares gives basic EPS of $3.75 and diluted EPS of $3.75.

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Computes basic and diluted earnings per share (EPS) from net income, preferred dividends, weighted average shares and dilutive securities.

Example with the default inputs (Net income $35,000.00, Preferred dividends $5,000.00, Weighted average common shares 8,000, Dilutive shares 0, Earnings added back on conversion $0.00): Net income of $35,000.00, less any preferred dividends, over 8,000 weighted shares gives basic EPS of $3.75 and diluted EPS of $3.75.

Method: Earnings = net income − preferred dividends. Basic EPS = earnings ÷ weighted average common shares. Diluted EPS = (earnings + earnings added back) ÷ (weighted shares + dilutive shares); if that is more than basic EPS, diluted EPS = basic EPS.

  • You enter the dilutive securities as one group of added shares and one earnings add-back, after leaving out any that are antidilutive on their own or in the ranked order; the calculator checks only the group as a whole.
  • No discontinued operations: the antidilution test uses earnings to common stockholders.
  • Arithmetic is exact on the typed decimals; EPS shows to the cent, halves up.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Net income $35,000.00, Preferred dividends $5,000.00, Weighted average common shares 8,000 gives Basic EPS $3.75, Diluted EPS $3.75, Earnings to common stockholders $30,000.00.Source: OpenStax, Principles of Finance, 6.5 Market Value Ratios (EPS = (net income − preferred dividends) ÷ weighted average common shares outstanding; Clear Lake Sporting Goods). https://openstax.org/books/principles-finance/pages/6-5-market-value-ratios: (35,000 − 5,000) ÷ 8,000 = $3.75
  2. Net income $50,000.00, Preferred dividends $10,000.00, Weighted average common shares 5,000 gives Basic EPS $8.00.Source: OpenStax, Principles of Accounting, Volume 1, 14.5 Discuss the Applicability of Earnings per Share as a Method to Measure Performance (Sanaron Company). https://openstax.org/books/principles-financial-accounting/pages/14-5-discuss-the-applicability-of-earnings-per-share-as-a-method-to-measure-performance: (50,000 − 10,000) ÷ 5,000 = $8.00
  3. Net income $5,000,000.00, Preferred dividends $500,000.00, Weighted average common shares 1,000,000, Dilutive shares 200,000 gives Basic EPS $4.50, Diluted EPS $3.75.Source: IFRS Foundation, IAS 33 Earnings per Share (diluted EPS adjusts the earnings and the shares for dilutive potential ordinary shares such as convertibles, options and warrants). https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
  4. Net income $350,000.00, Preferred dividends $30,000.00, Weighted average common shares 334,865, Dilutive shares 693 gives Basic EPS $0.96, Diluted EPS $0.95, Earnings to common stockholders $320,000.00.Source: Van Roestel, Intermediate Financial Accounting 2 (eCampusOntario, CC BY-NC-SA 4.0), 19.2 Basic and Diluted Earnings per Share: A Review (if-converted and treasury stock methods; Ogdell Co.). https://ecampusontario.pressbooks.pub/intermediatefinancialaccounting2/chapter/19-2-basic-and-diluted-earnings-per-share-a-review/: 320,000 ÷ 334,865 = $0.9556
  5. Net income $350,000.00, Preferred dividends $30,000.00, Weighted average common shares 334,865, Dilutive shares 19,593, Earnings added back on conversion $14,819.00 gives Basic EPS $0.96, Diluted EPS $0.94.Source: Van Roestel, Intermediate Financial Accounting 2 (eCampusOntario, CC BY-NC-SA 4.0), 19.2 Basic and Diluted Earnings per Share: A Review (if-converted and treasury stock methods; Ogdell Co.). https://ecampusontario.pressbooks.pub/intermediatefinancialaccounting2/chapter/19-2-basic-and-diluted-earnings-per-share-a-review/: 693 + 12,000 + 6,900 = 19,593 shares
  6. Net income $1,000,000.00, Weighted average common shares 500,000, Dilutive shares 100,000, Earnings added back on conversion $40,000.00 gives Basic EPS $2.00, Diluted EPS $1.73.Source: IFRS Foundation, IAS 33 Earnings per Share (diluted EPS adjusts the earnings and the shares for dilutive potential ordinary shares such as convertibles, options and warrants). https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
  7. Net income -$100,000.00, Weighted average common shares 50,000, Dilutive shares 10,000 gives Basic EPS -$2.00, Diluted EPS -$2.00.Source: IFRS Foundation, IAS 33 Earnings per Share (diluted EPS adjusts the earnings and the shares for dilutive potential ordinary shares such as convertibles, options and warrants). https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/

How it works

  • Earnings to common stockholders = net income − preferred dividends
  • Basic EPS = earnings to common stockholders ÷ weighted average common shares
  • Diluted figure = (earnings to common stockholders + earnings added back) ÷ (weighted average common shares + dilutive shares)
  • Diluted EPS = the diluted figure, or basic EPS when the diluted figure is higher than basic EPS (the securities are antidilutive and are left out)

Rules:

  • Net income may be negative (a loss). Preferred dividends, dilutive shares and the earnings added back are 0 or more; an empty box counts as 0.
  • Preferred dividends: the full dividend for the period on cumulative preferred stock, declared or not; on non-cumulative preferred stock, only a dividend that was declared.
  • Weighted average common shares must be more than 0, at most 10 trillion. Dilutive shares are at most 10 trillion. Money amounts are at most $1 quadrillion in size.
  • A per-share amount too large or too small to show as a number gives no answer.
  • The arithmetic is exact on the decimals you type, and the antidilution test compares the exact values. EPS shows to the cent, with halves rounded up (away from 0).

Assumptions

  • You work out the weighted average shares and the dilutive shares yourself: the treasury stock method for options and warrants, the if-converted method for convertible bonds and preferred stock.
  • You enter the dilutive securities as one group: the sum of their added shares and the sum of their after-tax earnings added back. Leave out any security that is antidilutive on its own, or that raises the diluted figure when added in order from the most dilutive. The calculator then checks only the group as a whole against basic EPS.
  • No discontinued operations. The antidilution test uses earnings to common stockholders.

Worked examples by hand

Clear Lake Sporting Goods. (35,000 − 5,000) ÷ 8,000 = $3.75. With no dilutive shares, diluted EPS is also $3.75.

Sanaron Company. (50,000 − 10,000) ÷ 5,000 = $8.00.

Ogdell Co., options and contingent shares. Net income $350,000, cumulative preferred dividends $30,000 (10,000 shares × $3, not declared), 334,865 weighted shares, and 400 + 143 + 150 = 693 shares from options and contingently issuable shares. Earnings = $320,000. Basic EPS = 320,000 ÷ 334,865 = $0.96 (0.9556). Diluted EPS = 320,000 ÷ 335,558 = $0.95 (0.9536).

Ogdell Co., with its convertible bonds. The 3.2% bonds ($400,000, 30 shares per $1,000 bond) add 12,000 shares and 400,000 × 0.032 × (1 − 0.27) = $9,344 of after-tax interest. The 2.5% bonds ($300,000, 23 shares per bond) add 6,900 shares and $5,475. Both are dilutive. Dilutive shares = 693 + 12,000 + 6,900 = 19,593; earnings added back = $14,819. Diluted EPS = 334,819 ÷ 354,458 = $0.94 (0.9446).

Stock options. Net income $5,000,000, preferred dividends $500,000, 1,000,000 weighted shares, options for 200,000 more shares. Basic EPS = 4,500,000 ÷ 1,000,000 = $4.50. Diluted EPS = 4,500,000 ÷ 1,200,000 = $3.75.

Convertible bonds. Net income $1,000,000, 500,000 shares. Conversion would add 100,000 shares and stop $40,000 of after-tax interest. Basic EPS = 1,000,000 ÷ 500,000 = $2.00. Diluted EPS = 1,040,000 ÷ 600,000 = $1.73 (1.7333…).

A loss. Net income −$100,000, 50,000 shares, options for 10,000 more. Basic EPS = −100,000 ÷ 50,000 = −$2.00. The diluted figure −100,000 ÷ 60,000 = −$1.67 is higher than −$2.00, so the options are antidilutive and diluted EPS = −$2.00.

Other questions people ask

What is EPS?

Earnings per share (EPS) is the profit that belongs to each common share. It is the amount each share would get if the company paid out all of the period's earnings to common stockholders.

How do I calculate EPS?

Subtract preferred dividends from net income, then divide by the weighted average number of common shares. Clear Lake Sporting Goods earned $35,000, paid $5,000 of preferred dividends and had 8,000 shares, so its EPS was 30,000 ÷ 8,000 = $3.75.

What is the weighted average number of shares?

Each block of shares counts for the part of the year it was outstanding. A company with 600 shares for 3 months, then 1,600 shares for 9 months, has 600 × 3/12 + 1,600 × 9/12 = 1,350 weighted average shares.

What is diluted EPS?

Diluted EPS shows what EPS would be if stock options, warrants and convertible securities were turned into common shares. More shares share the same earnings, so diluted EPS is lower. With $4,500,000 of earnings, 1,000,000 shares and options for 200,000 more, basic EPS is $4.50 and diluted EPS is $3.75.

What goes in "earnings added back on conversion"?

If convertible bonds became stock, the company would stop paying their interest, so its earnings would rise by the interest after tax. Ogdell Co.'s $400,000 of 3.2% bonds at a 27% tax rate add back 400,000 × 0.032 × (1 − 0.27) = $9,344. Convertible preferred stock works the same way with its dividends, which have no tax effect. Leave the box empty for options and warrants.

Why is diluted EPS never higher than basic EPS?

A security that would raise EPS, or shrink a loss per share, is called antidilutive, and the accounting rules leave it out. Test each kind of security on its own and add them from the most dilutive; enter only the ones that keep lowering EPS. If the diluted figure still comes out higher than basic EPS, this calculator shows basic EPS for both.