Fully diluted shares definition
/What are Fully Diluted Shares?
Fully diluted shares represent the total shares of common stock of a business after all possible conversions, such as stock options, have been exercised. This total includes all possible shares that could be issued under conversion agreements, even if they have not yet been issued. The use of fully diluted shares means that the shares outstanding are increased by the weighted average number of additional common shares that would have been outstanding if the company had converted all dilutive potential common stock to common stock.
Understanding Fully Diluted Shares
The fully diluted shares figure is used in the calculation of a public company’s diluted earnings per share figure, which is reported in its financial statements. It is intended to provide the investment community with the lowest possible earnings per share figure. Diluted earnings per share is generally lower than a firm’s basic earnings per share figure, which does not include any potential shares.