What is Earnings Per Share and Why Does it Matter?

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Earnings Per Share
Earnings Per Share

What are earnings per share? Earnings per share (EPS) refers to the profits of the company divided by the number of outstanding shares of stock in that company. These shares represent an owner’s equity in the company, so it’s no surprise that earnings per share are such an important measure of financial health.

What are earnings per share?

Most people have heard of earnings per share, but don’t really know what it means. Simply put, earnings per share is a company’s profit divided by the number of shares of stock outstanding. In other words, it shows how much profit each shareholder would get if the company was to be liquidated.Read more about earning per share here.

What Do Earnings Per Share Tell Us

Earnings per share (EPS) is a key metric used by investors to determine the profitability of a company. It tells us how much profit a company has made for each share of stock that exists. For example, if a company has earned $100,000 in profit and there are 10,000 shares of stock outstanding, the EPS would be $10.

How do you Calculate the EPS?

The EPS, or earnings per share, is a financial metric that measures the profitability of a company. To calculate the EPS, you take the net income of a company and divide it by the number of shares outstanding. The EPS can be used to compare the profitability of different companies.

Why Does the EPS Matter? (three sentences): The EPS is important because it shows how much profit a company is making per share. This metric can be used to compare different companies.

Example 1 – User’s Company Made $1 Million in Revenue but had a Net Loss of $500,000

If you’re not familiar with EPS, it stands for earnings per share and is a key metric that investors look at when considering whether or not to invest in a company. In very simple terms, EPS is calculated by taking a company’s net income (or profit) and dividing it by the number of shares outstanding. So, in our example above, the company’s EPS would be $1 million divided by 2 million shares outstanding, or $0.50.

Now why does this matter?

Example 2 – User’s Company Made $1 Million in Revenue and Had a Net Income of $200,000

If a company has 100,000 shares of common stock outstanding and earned a net income of $200,000, then its earnings per share would be $2.00.

This figure is important because it allows investors to see how much profit the company is making per share of stock.

It’s also a good way to compare different companies in the same industry because they may have different amounts of shares outstanding.

Example 3

Check apple’s eps here.