Diluted EPS vs. Convertible Preferred Stock   star content check off when done

\(Diluted\ EPS = \frac{NI}{WACSO\ + S_{n}}\)

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\(Diluted\ EPS = \frac{NI}{WACSO\ + S_{n}}\)

  • \(EPS\) - earnings per share
  • \(NI\) - net income
  • \(WACSO\) - weighted average common shares outstanding
  • \(S_{n}\) - new common shares that would have been issued at conversion
Tips: 

The if-converted method tells us what would happen to EPS if we had converted the convertible preferred stock into common shares at the beginning of the period.