Join the waitlist

If-Converted Method EPS Calculator for Convertible Preferred Stock

What do the numbers come to once the work is shown?

Basic and diluted EPS with convertible preferred stock assumed converted, with the dilution test.

  • Runs in your browser
  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Diluted EPS
0.59
Preferred assumed converted when that lowers EPS
Basic EPS
0.63
Dividend per incremental share
0.25
Dilutive when below basic EPS
Drawn to one scale
Diluted EPS0.59
Basic EPS0.63
Dividend per incremental share0.25
All results
MeasureResult
Diluted EPS0.59
Basic EPS0.63
Dividend per incremental share
Dilutive when below basic EPS
0.25
ResultDilutive: conversion assumed
How this was worked out
Work shownrecomputed as you type
Basic EPS = (net income - all preferred dividends) / basic shares
Dividend per incremental share = convertible preferred dividends / shares on conversion
If that is below basic EPS: diluted EPS = (net income - other preferred dividends) / (basic shares + conversion shares)

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Basic EPS = (net income - all preferred dividends) / basic shares
  • Dividend per incremental share = convertible preferred dividends / shares on conversion
  • If that is below basic EPS: diluted EPS = (net income - other preferred dividends) / (basic shares + conversion shares)

How it works

The if-converted method assumes convertible preferred stock was converted at the start of the period. The preferred dividends are added back to the numerator and the conversion shares are added to the denominator.

The test for dilution compares the dividend saved per new share against basic EPS. If each new share saves more than basic EPS, assuming conversion would raise EPS, so the security is antidilutive and left out.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Are cumulative dividends included?

Yes, whether or not declared, if the preferred is cumulative.

What about convertible debt?

The same idea applies, but you add back after-tax interest. This tool covers preferred stock.

What if conversion happened mid-year?

Shares issued on an actual conversion enter basic EPS from the conversion date. The if-converted add-back then covers only the part of the year before conversion, so enter weighted figures.

Formulas on this page are the standard definitions.

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

Related audit calculators

CalculatorWeighted Average Shares Outstanding CalculatorWeighted average common shares for the year from beginning shares and up to three issuances or buybacks by month.CalculatorTolerable Misstatement Allocation Calculator by AccountSpread performance materiality across up to five accounts in proportion to balance size or to the square root of balance size.CalculatorDiscovery Sampling Calculator: Sample Size to Find at Least One ExceptionSample size that gives your confidence of seeing at least one exception if the population exception rate is at the critical rate, with an exact finite-population version.
For US CPA firms

Join the CORAA waitlist

CORAA AI drafts audit working papers from your client’s QuickBooks books and does the first pass: lead schedules, tie-out, memos, draft notes and letters. CORAA Network reviewers clear every finding. Your firm reviews and signs.

  • First audit free, so you can judge the quality on a real file
  • Flat fee by entity size; messy books included
  • We work only with CPA firms, never their clients
See how it works →

* required