What is Diluted Earnings Per Share (DEPS)?
Diluted Earnings Per Share (DEPS) Calculator: Diluted Earnings Per Share (DEPS) is a financial metric that shows the earnings available to each outstanding share of common stock if all convertible securities (such as convertible bonds and preferred stock) were converted into common shares. It is a more conservative measure of EPS that takes into account the potential dilution of existing shares.
Calculator
Diluted EPS Result
| Diluted EPS ($) |
|---|
| 0.00 |
Calculation Method
To calculate the Diluted EPS, use the formula: DEPS = NI / (AS + OI), where:
- NI = Net Income
- AS = Average Shares
- OI = Other Convertible Instruments
FAQs
1. What is Diluted Earnings Per Share (DEPS)?
Diluted Earnings Per Share (DEPS) accounts for the dilution effect of potential conversion of convertible securities, showing the earnings per share if all those securities were converted into common stock. DEPS is typically used to evaluate the worst-case scenario for shareholders.
2. How is Diluted EPS calculated?
DEPS is calculated using the formula: DEPS = Net Income / (Average Shares + Convertible Instruments). The formula takes into account the net income, average shares outstanding, and the potential dilution from convertible instruments like convertible bonds and preferred stock.
3. Why is Diluted EPS important?
Diluted EPS is important because it shows investors a more conservative view of earnings, factoring in the potential dilution of shares. It helps assess the possible earnings reduction for existing shareholders if convertible securities are exercised or converted.
4. What are Convertible Instruments?
Convertible instruments refer to securities, such as convertible bonds or preferred stock, that can be converted into common shares. This conversion can dilute the earnings per share, which is why DEPS accounts for them in the calculation.
5. How can I use the Diluted EPS Calculator?
To use the Diluted EPS Calculator, input the values for Net Income, Preferred Dividends, Average Shares, and Other Convertible Instruments. The calculator will automatically compute the Diluted Earnings Per Share (DEPS) using the formula: DEPS = NI / (AS + OI).