Table:
|  | 2019 | 2018 | 2017 |
| --- | --- | --- | --- |
| Numerator: |  |  |  |
| Net income (loss) | $20,732 | $(26,743) | $18,072 |
| Net income (loss) per share: |  |  |  |
| Basic | $0.25 | $(0.34) | $0.24 |
| Diluted | $0.25 | $(0.34) | $0.24 |
| Denominator: |  |  |  |
| Weighted average shares used in computing net income (loss) per share: |  |  |  |
| Basic | 81,447,998 | 77,709,592 | 73,994,577 |
| Weighted average effect of diluted stock options | 229,035 | — | 544,520 |
| Weighted average effect of diluted stock awards | 1,004,181 | — | 789,246 |
| Diluted | 82,681,214 | 77,709,592 | 75,328,343 |
Paragraphs:
5. Net Income (Loss) per Share
The Company calculates basic earnings per share by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. The diluted earnings per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period using the treasury stock method. For purposes of this calculation, options to purchase common stock, stock awards, and the Convertible Senior Notes are considered to be common stock equivalents.
Since the Company has the intent and ability to settle the principal amount of the Convertible Senior Notes in cash and any excess in shares of the Company’s common stock, the Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable.
The conversion spread will have a dilutive impact on net income (loss) per share of common stock when the average market price of the Company’s common stock for a given period exceeds the conversion price of $113.75 per share for the Convertible Senior Notes. During the fiscal years ended July 31, 2019 and 2018, the Company’s weighted average common stock price was below the conversion price of the Convertible Senior Notes.
The following table sets forth the computation of the Company’s basic and diluted net income per share for the years endedJ uly 31, 2019, 2018 and 2017 (in thousands, except share and per share amounts):
Question:
How is the basic earnings per share calculated?
Answer: by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period.