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diluted earnings per share
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diluted earnings per share

definition

A measurement used to evaluate the quality of a company's earnings per share. Diluted earnings are calculated by adding convertible securities to outstanding shares and dividing that number into the company's net earnings. It is intended to convey a worst case scenario if every investor and employee with warrants, convertible debentures, and stock options exercised the option to convert them to outstanding shares. Compare to Basic Earnings Per Share.