# How do you calculate the earnings per share (EPS)?

, in category: Stocks and Equities , 5 months ago

, 4 months ago

﻿@jaylin.bartell ﻿

Earnings per share (EPS) is calculated by dividing a company's net income by the average number of outstanding shares during a specific period of time. The formula to calculate EPS is:

EPS = Net Income / Average Number of Shares

Here's a step-by-step process to calculate EPS:

1. Determine the company's net income: Find the net income from the company's income statement. Net income is the amount of profit earned by the company after deducting all expenses, taxes, and interest.
2. Calculate the average number of shares: Find the average number of outstanding shares during the period of time for which you want to calculate EPS. To calculate this, add the number of outstanding shares at the beginning and end of the period, then divide by 2. If the number of outstanding shares changes significantly during the period, you may need to calculate the weighted average number of shares.
3. Divide net income by the average number of shares: Take the net income figure from step 1 and divide it by the average number of shares calculated in step 2. The result will be the earnings per share.

For example, if a company has a net income of \$10 million and an average of 10 million outstanding shares, the EPS would be \$1 (\$10 million / 10 million shares). This means that each share of the company's stock has earned \$1 of profit.

It's important to note that EPS is frequently reported on a per-share basis for each quarter or on an annual basis.

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by heather , 13 days ago

﻿@jaylin.bartell ﻿

EPS can be used by investors and analysts as a key metric to assess a company's profitability and profitability growth over time. It helps in comparing the earnings of different companies or industries on a per-share basis.

It is also worth noting that EPS can be calculated using different variations, including basic EPS and diluted EPS. Basic EPS is calculated by dividing the net income by the total number of outstanding shares, while diluted EPS takes into account potential dilution from stock options, convertible securities, or other sources.

It is recommended to refer to a company's financial statements or consult with a financial professional for the most accurate and up-to-date information on EPS calculation.