Earnings Per Share

3 Months Ended

Mar. 31, 2021

12. Earnings Per Share

(a) Basic

Basic earnings per share is calculated by dividing the net income attributable to Karat Packaging for the year by the weighted average number of common shares outstanding during the related period.


	Three-months ended March 31,
	2021		2020
Net income attributable to Karat Packaging Inc.	$	1,780,000	$	2,451,000

Weighted average number of common shares in issue		15,167,000		15,190,000

Basic earnings per share	$	0.12	$	0.16

(b) Diluted

For the purpose of calculating diluted earnings per share, the profit attributable to equity holders of the Company and the weighted average number of common shares outstanding during the related period have been adjusted for the dilutive effects of all potential convertible shares and shares issuable through stock options and restricted stock awards. The dilutive earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of shares that would have been in issue, inclusive of all potentially dilutive shares including unexercised stock options and unvested restricted stock, adjusted by the number of such shares that would have been issued at fair value as follows:


	Three-months ended March 31,
	2021		2020
Net income attributable to Karat Packaging Inc.	$	1,780,000	$	2,451,000

Weighted average number of common shares in issue		15,167,000		15,190,000
Dilutive shares				—
Stock options and restricted stock units		236,000		271,000
Adjusted weighted average number of common shares		15,403,000		15,461,000

Diluted earnings per share	$	0.12	$	0.16

For the period ended March 31, 2021, a total of 236,000 shares of potentially dilutive shares have been excluded in the diluted earnings per share calculation due to its anti-dilutive impact on earnings per share.