What it is
Basic EPS divides income available to common shareholders by weighted-average shares outstanding. Diluted EPS adds the shares and income effects of options, warrants, unvested awards and convertible securities that lower EPS. This workbook builds both from a share log and a list of potentially dilutive securities.
Options and warrants use the treasury stock method at the average market price. Convertibles use the if-converted method and enter in order of lowest incremental EPS, kept only if they lower diluted EPS. A loss available to common shareholders makes every potential share antidilutive.
When to use it
- For any entity that presents EPS in its financial statements.
- When options, warrants or convertible instruments are outstanding.
- To support the EPS note and the reconciliation of numerators and denominators.
What’s inside
- Inputs for net income, preferred dividends, participating allocation, period and average price
- Share log with days outstanding and weighted shares
- Treasury stock method table for options, warrants and unvested awards
- If-converted data and a sequential antidilution test in order of lowest incremental EPS
- EPS tab with basic and diluted EPS and a dilution check
Standard cited
This template follows ASC 260. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
How is the treasury stock method applied?
Assume the instruments are exercised and the proceeds buy back shares at the average market price. The incremental shares are the number outstanding less the shares bought back. An exercise price at or above the average price adds nothing.
What is the if-converted method?
Assume the convertible converted at the start of the period. Add the shares issuable to the denominator and add back the related after-tax interest or dividends to the numerator.
Why is there an antidilution test?
Diluted EPS cannot rise above basic EPS from dilutive securities. The test adds instruments from lowest incremental EPS and keeps each only if it lowers the running diluted EPS.
What about stock splits?
Restate all share counts retroactively for splits and stock dividends before entering them, including the beginning balance.
Related templates
- Equity Rollforward Template (Corporation and LLC)
- Disclosure Checklist: Equity (ASC 505)
- Financial Statement Shell: Balance Sheet, Income, Equity and Cash Flows
- Stock Compensation Roll-Forward Workbook (ASC 718)
Last updated 11/05/2026. All free templates.