Primary earnings per share are earnings available to a stock divided by the number of shares outstanding. Available earnings are usually determined by net earnings after taxes and preferred dividends. It includes earnings per share, including common stock, stock options, and some convertible debt. Primary earnings per share (or fully-diluted earnings per share) uses the sum of all shares currently outstanding and all common stock equivalents, resulting in the number of shares that would be outstanding if all convertible securities were converted into common stock.
Under Financial Accounting Standards Board rules, primary earnings per share are no longer reported. The new rule requires companies to state earnings per share two ways: basic and diluted. No longer is there a third way, primary earnings per share.
