# If-Converted Convertible-Preference Dilution

`D46-F02-A02` · Earnings and Per-Share Analytics → Basic and Diluted EPS · archetype `record-transform` · difficulty 3/5 · verification **contract**

Full page: https://docs.thefintechbuilder.com/earnings-and-per-share-analytics/basic-and-diluted-eps/if-converted-convertible-preference-dilution/
Agent skill: `npx skills add IslamBaraka90/Fintech-Algorithms-Library` — https://docs.thefintechbuilder.com/guides/agent-skill/

## Install and import

```bash
npm install fintech-algorithms
```

```ts
import { calculateConvertiblePreferenceDilution } from "fintech-algorithms/earnings-and-per-share-analytics/basic-and-diluted-eps/if-converted-convertible-preference-dilution";
```

## Signature

```ts
calculateConvertiblePreferenceDilution(input)
```

The if-converted method for convertible preference shares: assume conversion, add the shares, add back the preference dividend. Conversion is only included when it is **dilutive** — an anti-dilutive instrument is excluded, and including it overstates EPS.

## Parameters

| Name | Type | Required | Notes |
| --- | --- | --- | --- |
| `input` | `DilutionInput` | yes | The instrument's conversion terms plus `basic_control_numerator` and `basic_weighted_average_shares`, which are the control figures the dilution test is measured against. |

## Returns

`{ metric, loss_making_period_flag, dilutive, diluted_eps, … }`

The diluted figure with an explicit dilutive/anti-dilutive determination, and a loss-making flag — in a loss period potential shares are anti-dilutive by definition, which reverses the usual test.

## Errors

- When the conversion ratio is missing or not positive — reported as a status rather than thrown

## Complexity

Time `O(1)`, space `O(1)`.

## Worked example

Captured by running this function on the input its own test provides. Real output of real code — but not asserted against a published figure.

### Input

`input`:

```json
{
  "entity_id": "EXAMPLE-PLC",
  "instrument_id": "SERIES-A-CPS",
  "period_start": "2025-01-01",
  "period_end": "2025-12-31",
  "as_of": "2026-02-20T16:30:00Z",
  "accounting_framework": "IFRS",
  "currency": "USD",
  "basic_control_numerator": "90",
  "basic_weighted_average_shares": "30",
  "earnings_scale": "1000000",
  "share_scale": "1000000",
  "preferred_dividend_adjustment_deducted_from_basic": "6",
  "other_pre_tax_income_adjustment_if_converted": "0",
  "income_tax_effect_of_other_adjustment_if_converted": "0"
}
```

Showing 14 of 45 fields.

### Call

```ts
calculateConvertiblePreferenceDilution(input)
```

### Returns

object with 37 fields: metric, entity_id, instrument_id, period_start, period_end, accounting_framework, loss_control_rule, currency, …

```json
{
  "metric": "if_converted_convertible_preference_dilution",
  "entity_id": "EXAMPLE-PLC",
  "instrument_id": "SERIES-A-CPS",
  "period_start": "2025-01-01",
  "period_end": "2025-12-31",
  "accounting_framework": "IFRS",
  "loss_control_rule": "candidate_comparison",
  "currency": "USD",
  "basic_control_numerator_base": "90000000",
  "basic_weighted_average_shares_base": "30000000",
  "preferred_dividend_addback_base": "6000000",
  "other_pre_tax_income_adjustment_base": "0",
  "income_tax_effect_of_other_adjustment_base": "0",
  "net_numerator_adjustment_base": "6000000"
}
```

Showing 14 of 37 fields.

## Verification and provenance

Tier: **contract**.

The module loads, the entry point is callable and its declared signature matches the compiled code. The example below is real captured output, but no independently published figure asserts the numbers.

Both tiers guarantee the signature. Full explanation: https://docs.thefintechbuilder.com/guides/verification/

Generated from the docs.json payload shipped inside fintech-algorithms@0.13.1.
The signature and parameter list are checked against the compiled implementation at build time,
so a description that contradicts the code fails the build rather than reaching this file.

## Links

- Article (how it works, step by step): https://thefintechbuilder.com/earnings-and-per-share-analytics/basic-and-diluted-eps/if-converted-convertible-preference-dilution/
- Implementation source: https://github.com/IslamBaraka90/Fintech-Algorithms-Library/blob/main/src/earnings-and-per-share-analytics/basic-and-diluted-eps/if-converted-convertible-preference-dilution/impl.ts
- Package on npm: https://www.npmjs.com/package/fintech-algorithms
- Domain index for agents: https://docs.thefintechbuilder.com/earnings-and-per-share-analytics/llms.txt