In: Accounting
Diluted weighted shares is always greater than or equal to basic weighted average shares
Dilutive EPS= Net income /Weighted avg no. of shares outstanding considering the effect of dilutive stocks |
As per FASB, Codification Topic 260 (FASB
ASC 260), companies are required to report Diluted EPS using the
"Treasury Stock Method"which requires the following
assumptions:
a) Put options shall be assumed to have been exercsed at the
beginning of the period ,
b) the proceeds from exercise of the Put options assumed to be used
by the company to repurchase all
of those issued shares at the average market price during the
period , and
3) the incremental shares (difference between the number of shares
assumed issued and the number
of shares assumed purchased) to be included in the denomiNetor of
the Diluted EPS
Accordingly, Dilutive weighted shares will always be greater than or equal to basic weighted avg shares.