Fully diluted earnings per share is a worst case scenario.

Question

Quizplus · Accepted Answer

Fully diluted earnings per share takes into account all potential dilutive securities, including stock options, warrants, and convertible securities. This calculation assumes that all of these securities are converted into common shares, which results in the highest possible number of outstanding shares and thus a lower earnings per share. Therefore, fully diluted earnings per share is considered a worst case scenario for investors.

Fully Diluted Earnings Per Share Is a Worst Case Scenario