Business and Personal Finance Dictionary

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• DILUTED EARNINGS PER SHARE
  
  In addition to reporting earnings per share, corporations must report diluted earnings per share to account for the possible, though unlikely, occurrence that all outstanding warrants and stock options are exercised, and all convertible bonds and preferred shares are exchanged for common stock. Diluted earnings actually report the smallest potential earnings per common share that a company could have based on its current earnings. In theory, at least, knowing the diluted earnings could influence how much you would be willing to pay for the stock.
  
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