The formulas
- Undistributed = net income - preferred dividends - dividends declared on common - dividends declared on participating
- Allocation of undistributed = in proportion to weighted shares (assumes equal participation rights); a negative undistributed amount goes entirely to common
- EPS = (dividends on common + allocated undistributed) / common shares
How it works
When a security shares in dividends with common stock, such as certain preferred stock or restricted shares, net income is split between common and the participating security before EPS is divided. Earnings are first allocated by dividends declared, then the undistributed remainder is shared by their participation rights.
This tool allocates undistributed earnings by share count, which fits securities that share equally per share. If the contract gives a different sharing ratio, use that ratio in place of share counts. If distributions exceed earnings, the negative undistributed amount is charged to common only, since participating holders are assumed to have no obligation to share losses. The result is basic EPS only.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Which securities participate?
Those whose terms give a right to dividends or earnings alongside common stock. Read the terms.
What if there is a loss?
Losses are allocated only if the holder has a contractual obligation to share them.
Is diluted EPS covered?
No. This tool covers basic EPS.
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.