diluted earnings per share business definition

An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of common stock. Net income is adjusted for any changes that would occur because of the conversions. Diluted earnings per share is a particularly effective method of presenting earnings-per-share data for companies with complex capital structures. Compare basic earnings per share. See also dual presentation.