Diluted EPS
The objective of Diluted EPS is to measure a company’s pro forma performance over the reporting period from the perspective of the common stockholder as if the exercise or conversion of potentially dilutive securities had actually occurred. This presentation is consistent with the conceptual framework objective of providing information on an enterprise’s financial performance, which is useful in assessing the prospects of the enterprise. Basic EPS is historical. It reports what enterprise performance was during the period. Diluted EPS reveals what could happen to EPS if and when dilution occurs. Taken together, these two measures provide users with information to project historical information into the future and to adjust those projections for the effects of potential dilution.