What is the difference between basic and diluted EPS?

Basic EPS uses only common shares currently outstanding. Diluted EPS also counts shares that could be issued from stock options, warrants, and convertible securities, giving a more conservative (lower) figure.

Why subtract preferred dividends from net income?

Preferred dividends are paid to preferred shareholders before common shareholders receive anything. Basic and diluted EPS measure earnings available to common shareholders only, so preferred dividends are deducted from net income first.

What are dilutive securities?

Dilutive securities are instruments that can be converted into or exercised for common shares — stock options, restricted stock units, convertible bonds, and warrants. Adding their potential share count to the denominator lowers EPS.

What does a negative EPS mean?

A negative EPS (loss per share) means the company reported a net loss after preferred dividends for the period. It is calculated the same way — the result is simply negative.

Should I use GAAP or adjusted net income?

GAAP net income gives the official reported EPS figure. Adjusted (non-GAAP) net income strips one-time items. Both are valid inputs — just be consistent and label which figure you are using.

Earnings Per Share Calc

Name: Earnings Per Share Calc
Availability: InStock
Author: Nham Vu

Calculate basic and diluted EPS from net income, preferred dividends, and weighted average shares outstanding.

Enter Financial Data

Net Income ($)

Preferred Dividends ($)

Weighted Average Basic Shares

Dilutive Potential Shares (optional)

Shares from stock options, warrants, or convertible securities.

Basic EPS

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Diluted EPS

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Summary

Calculate basic and diluted EPS from net income, preferred dividends, and weighted average shares outstanding.

How it works

Enter the company's net income for the period.
Enter preferred dividends paid (0 if none).
Enter the weighted average basic shares outstanding.
Optionally enter dilutive securities (stock options, convertible bonds) for diluted EPS.
Basic EPS = (Net Income − Preferred Dividends) / Weighted Average Basic Shares.
Diluted EPS = (Net Income − Preferred Dividends) / (Weighted Average Basic Shares + Dilutive Shares).

Use cases

Evaluate a company's profitability on a per-share basis.
Compare EPS across quarters or fiscal years.
Screen stocks for investment analysis.
Prepare financial reports and earnings announcements.
Understand the dilutive impact of stock options and convertibles.
Cross-check reported EPS figures in annual or quarterly filings.

Frequently Asked Questions

Last updated: 2026-06-11 · Reviewed by Nham Vu