A company with outstanding in-the money employee stock options will report a diluted EPS that is lower than basic EPS.

Question

Quizplus · Accepted Answer

Diluted EPS takes into account the potential dilution that could occur if all in-the-money options and other dilutive securities were exercised or converted into common stock, thereby increasing the total number of shares outstanding and typically resulting in a lower EPS than the basic EPS, which does not consider such potential dilution.

A Company with Outstanding In-The Money Employee Stock Options Will