View Earning Per Share Equation
Gif. Learn how to calculate earnings per share (eps) and why it is an important gauge in determining a stock's value and the profitability of a company. Earnings per share (eps) is calculated by determining a company's net profit and allocating that to each outstanding share of common stock.
Earnings per share (eps) is the monetary value of earnings per outstanding share of common stock for a company.
Obviously, this calculation is heavily influenced on how many shares are outstanding. The numerator is the net income available for common stockholders (i.e., net income less preferred dividend) and the denominator is the average number of shares of common stock outstanding during the year. Earnings per share (eps) is calculated as a company's profit divided by the outstanding shares of its common stock. There are two ways to calculate eps:
