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Earnings Per Share Formula:
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Earnings Per Share (EPS) is a financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock. It serves as an indicator of a company's profitability and is widely used by investors to evaluate corporate performance.
The calculator uses the basic EPS formula:
Where:
Explanation: The formula divides the company's net income by the total number of outstanding shares to determine how much profit is attributable to each share.
Details: EPS is a critical metric for investors as it provides insight into a company's profitability on a per-share basis. Higher EPS values generally indicate better financial performance and can influence stock prices and investment decisions.
Tips: Enter the company's net income in dollars and the total number of outstanding shares. Both values must be positive numbers to calculate a valid EPS.
Q1: What's the difference between basic EPS and diluted EPS?
A: Basic EPS uses the current number of outstanding shares, while diluted EPS accounts for all potential shares that could be created through conversions, options, and warrants.
Q2: What is considered a good EPS value?
A: A good EPS varies by industry and company size. Generally, higher EPS is better, but it should be evaluated in context with other financial metrics and compared to industry peers.
Q3: Can EPS be negative?
A: Yes, if a company reports a net loss (negative net income), the EPS will also be negative, indicating the company is losing money on a per-share basis.
Q4: How often is EPS calculated?
A: Companies typically report EPS quarterly in their financial statements and annually in their annual reports.
Q5: Why do investors pay attention to EPS growth?
A: Consistent EPS growth often indicates a company is increasing its profitability and may signal a healthy, growing business that could provide good returns to shareholders.