Final answer:
In a complex capital structure, diluted earnings per share is not reported when the securities included in the capital structure are antidilutive.
Step-by-step explanation:
Diluted earnings per share is a measure that takes into account the potential impact of securities that could be converted into common shares and dilute the earnings of existing shareholders. In a complex capital structure, such as one that includes convertible securities, stock options, or warrants, diluted earnings per share is not reported when these securities are considered antidilutive. This means that the securities would not decrease the earnings per share if they were converted into common shares.
For example, if a company has convertible preferred stock that is required to be converted into common shares at a higher price than the market price of the common shares, the conversion would actually increase the earnings per share. In this case, the convertible preferred stock is considered antidilutive, and diluted earnings per share would not be reported.