A financial structure with stock outstanding that has potential for dilution, requiring a dual presentation of earnings per share by showing primary earnings per common share and fully diluted earnings per common share.
The if-converted method is a technique used in the USA for determining the dilution of convertible securities that are not common stock equivalents in the calculation of fully diluted earnings per share. The assumption is made that the securities are converted at the beginning of the year or the issue date if later.
