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Earnings Per Share (EPS)

What is 'Earnings Per Share - EPS'

Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Explaining 'Earnings Per Share - EPS'

Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio.


Further Reading


Economic value added, future accounting earnings, and financial analysts' earnings per share forecasts
link.springer.com [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

The Effect Of Earnings Per Share (EPS) & Return On Equity (ROE) On Stock Price Of Banking Company Listed In Indonesia Stock Exchange (Idx) 2010-2014The Effect Of Earnings Per Share (EPS) & Return On Equity (ROE) On Stock Price Of Banking Company Listed In Indonesia Stock Exchange (Idx) 2010-2014
ejournal.unsrat.ac.id [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

Earnings management through transaction structuring: Contingent convertible debt and diluted earnings per shareEarnings management through transaction structuring: Contingent convertible debt and diluted earnings per share
onlinelibrary.wiley.com [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

Is it time to get rid of earnings-per-share (EPS)?Is it time to get rid of earnings-per-share (EPS)?
academic.oup.com [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

Interest rate and financial performance of banks in PakistanInterest rate and financial performance of banks in Pakistan
ideas.repec.org [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

Stock repurchases and executive compensation contract design: The role of earnings per share performance conditionsStock repurchases and executive compensation contract design: The role of earnings per share performance conditions
meridian.allenpress.com [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

How earning per share (EPS) affects on share price and firm valueHow earning per share (EPS) affects on share price and firm value
dspace.bracu.ac.bd [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …

The effect of financial leverage on corporate performance of some selected companies in NigeriaThe effect of financial leverage on corporate performance of some selected companies in Nigeria
52.196.142.242 [PDF]
… attention paid to new financial performance measures as substitutes for traditional accounting-based earning per share measures (Ittner … and EPS for year ended December 31, t − 1. Pt−1 is the common stock price on … ECONOMIC VALUE ADDED AND EARNINGS PER …



Q&A About Earnings Per Share (EPS)


Why do you need to calculate EPS?

To show the earnings generated by a company in relation to its outstanding shares.

How does one calculate EPS?

One calculates EPS by dividing total earnings by total number of outstanding shares.

What is EPS?

Earnings per share (EPS) is an important financial ratio that shows the efficiency of an organization to use its available assets to generate profits for the shareholders.

Which option would you use if your company had both convertible securities and employee stock purchase plans ?

You would use both methods together because each situation needs separate calculations .

What is the price-earnings ratio?

The price-earnings ratio is the ratio of a company's share (stock) price to the company's earnings per share.

What are four different categories that should be included when calculating EPS?

Net income, continuing operations, discontinued services and extraordinary items.

How do you calculate PE ratios?

You can calculate PE ratios by dividing a stock's current market price by its earnings per share for the most recent 12 months. For example, if Share A is trading at 24 and the earnings per share for the most recent 12-month period is 3, then Share A has a PE ratio of 24(3 per year) = 8. Put another way, the purchaser of Share A is investing 8 for every dollar of annual earnings; or, if earnings stayed constant it would take 8 years to recoup your investment in this stock. Companies with losses (negative earnings) or no profit have an undefined PE ratio (usually shown as "not applicable" or "NA"); sometimes, however, a negative PE ratio may be shown.