Accounting Dictionary

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Earnings per Share

Definition: Earnings per share is a company's net income minus any dividends on preferred shares, divided by the number of shares outstanding. The number of shares outstanding is commonly expressed as the weighted average number of shares outstanding over the reporting period.

Diluted earnings per share expands on the basic earnings per share concept by also including the effects of the conversion of convertible instruments and outstanding stock warrants (which reduces the amount of earnings per share).