Definition – What is Earnings per Share?
Earnings per Share is the amount that the company earns for each share of the company.
Formula – How to calculate EPS
Earnings per Share = (Net Income – Preferred Dividends) / Shares Outstanding
A company has net income of $10,000 and preferred dividends of $3,000. There are 3,000 shares outstanding.
Earnings per Share = ($10,000 – $3,000) / 3,000 = $7,000 / 3,000 = $2.33
Therefore, the company has an earnings per share of $2.33.
Sources and more resources
- Accounting Tools – Earnings per share ratio – The EPS formula.
- The Motley Fool – What is Earnings per Share? & How to calculate earnings per share on a balance sheet – Two articles on EPS.
- Wikipedia – Earnings per share – Wikipedia’s explanation of EPS and how it is calculated.
- Investopedia – Earnings per share – EPS – An example of how to calculate earnings per share.