Finance/Stock question...

[aphex]

Im working on a company valuation for dell computers and while im looking over their respective financial statements for the EPS, i notice that dell splits them into 2 categories: Diluted & Basic.

Does anyone know what the difference is between the 2 of them?

LINK

Excerpt:

Earnings per common share:
Basic $0.18 $0.16 $0.17
Diluted $0.17 $0.16 $0.16

Weighted average shares outstanding:
Basic 2,599 2,611 2,582
Diluted 2,690 2,728 2,783

 

[Michael]

Use the Diluted number.

The Basic number is calculated using the weighted shares outstanding.

The Diluted number uses the weighted sharecount if the options and other equity instruments that have not yet been issued but are in the money. It backs out the impact of actually issueing the shares for the cash that would be received.

Michael

 

[iamwiz82]

basic is income avail. to common shareholders divided by the weighted average of the number of common shared outstanding, i think.

diluted stocks include possible dilution of the stock if there were more common stocks were issued.

 

[aphex]

Originally posted by: Michael
Use the Diluted number.

The Basic number is calculated using the weighted shares outstanding.

The Diluted number uses the weighted sharecount if the options and other equity instruments that have not yet been issued but are in the money. It backs out the impact of actually issueing the shares for the cash that would be received.

Michael

Ahhh ok, i think i get it. Thanks bro