In short
A potential common share is antidilutive if including it would increase earnings per share or reduce loss per share. Antidilutive securities are left out of diluted earnings per share.
Key takeaways
- When there is a loss from continuing operations, all potential common shares are antidilutive.
- Income from continuing operations is the control number for deciding dilution.
- Securities are added in order from most to least dilutive.
Where it's tested
FAR: Equity & Earnings Per Share — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A potentially dilutive security is EXCLUDED from the diluted EPS calculation when: