basic earnings per share investment & finance definition

Earnings per share that are calculated without taking into account stock options, warrants, and convertible debt. If a company has a large amount of those financial instruments outstanding, then diluted earnings per share provides a better measurement of the earnings that should be allocated to each share of stock. The diluted earnings per share calculation includes stock options, warrants and convertible debt. Typically, companies report both basic earnings per share and diluted earnings per share.