Arithmetic circuits plays an important role in digital systems. Realization of complex digital circuits is possible with development in very large scale integration (VLSI) circuit technology. In this paper an arithmetic unit based on IEEE-754 standard for floating point numbers has been implemented on Spartan3E XC3S500e FPGA Board. Here Floating Point Unit (FPU) follows IEEE single precision format. Various arithmetic operations such as, addition, subtraction multiplication and division on floating point numbers have been performed on arithmetic unit. Novel approach of converting fixed to floating point saves around 30% of slices and can perform 50 Mega floating point operations per second on Spartan 3E FPGA at 50 MHz clock. Arithmetic operations using proposed conversion optimize space and speed requirements.