Interpreting EPS: EPS is a financial ratio that indicates the profitability of a company. It is calculated by dividing net income by the weighted average number of common shares outstanding during the period. A higher EPS indicates greater profitability. Basic EPS: Basic EPS is calculated by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. It does not take into account the potential dilution that could occur if securities convertible into common shares were exercised. Diluted EPS: Diluted EPS takes into account the potential dilution that could occur if securities convertible into common shares were exercised. It is calculated by adjusting both the numerator (net income) and the denominator (weighted average number of shares outstanding) for the effects of dilutive securities. Weighted Average of Outstanding Shares (WAOS): This is the number of shares used in calculating EPS. It is calculated by weighting the number of shares outstanding by the fraction of the year they were outstanding. Stock Splits