Define: Diluted Share

Business, Legal & Accounting Glossary

Definition: Diluted Share



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Full Definition of Diluted Share


Diluted share is a term used in reporting earnings per share, as in “earnings per diluted share.” Under Statement of Financial AccoAccounting Standards 128, a company that has a complex capital structure (ie, it has securities that have the potential of becoming common shares) must report earnings on both a “basic” (non-dilutive) and diluted share basis. Computing earnings on a dilutive share basis involves consideration of three types of securities: options and warrants, contingent shares, and convertible securities. These securities are assumed to be exercised, issued, or converted, which increases the weighted average of outstanding shares upon which diluted share earnings are computed. Since earnings on a diluted share basis assume more outstanding shares, diluted share earnings are smaller than basic earnings per share. Thus earnings on a diluted share basis is the more conservative presentation.


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Diluted Share. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/diluted-share/ (accessed: April 10, 2020).
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Diluted Share. PayrollHeaven.com. Retrieved April 10, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/diluted-share/

Definition Sources


Definitions for Diluted Share are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020