Diluted Shares Calculation
When calculating diluted EPS for a company, should you use the diluted shares number presented in the annual/quarterly reports or calculate it yourself through the treasury stock method?
Trending Content - Hedge Fund Forum
| +28 | James Fishback | 10 | 8h |
| +21 | Future of L/S | 5 | 3d |
| +12 | Looking for Fund to Partner With - LMM Activist | 4 | 1d |
| +10 | SM L/S Compensation? | 3 | 1d |
| +9 | Moving from credit to equity? | 3 | 5d |
| +9 | MMHF Central Execution Trajectory/Advice | 1 | 2d |
| +9 | How to prep for credit HF? | 4 | 2d |
| +4 | Jensen Huang | 1 | 20h |
| +3 | Chefs at Pod Shops | 2 | 3d |
| +1 | Discerene Group | 2 | 1h |
Career Resources
Use the diluted number provided in the press release or 10-Q for EPS calculation.
most people expect you to use the treasury stock method if you work at a fundamental shop
does it add value for you to do this? sometimes it does, but these cases are rare. that said, people almost always take the time to do this in my experience.
The diluted share count reported in GAAP financials are already calculated using the treasury stock method...
if you hand calculate as most people do it will rarely match what is reported in company financials.
the cases where it REALLY matters are where share price has moved from date of the 10-Q / 10-K and this affects dilution from converts / options. imagine for example that for the Q ended march 30 you report these results mid-year and your stock rises 100% which makes more converts / options in the money. this would change diluted shares.
Qui officiis et fugiat deleniti enim quaerat consequatur. Nam nobis omnis iste dolore ab. Labore ab quia dolor in reiciendis.
Sed dolores totam et enim quidem. Quia rem aliquam voluptas id.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...