Earnings Per Share (EPS)

Earnings Per Share (EPS) is a financial indicator that measures a company's performance in terms of the profit it generates for each share in circulation. It is a measure of the profit that corresponds to each particular share. The idea is for investors to know the expected return for each of the shares in which they decide to invest.

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Definition

EPS (Earnings Per Share) is a financial measure that represents a company's net profit divided by the total number of shares in circulation. This figure is important not only for investors but also for the company's management because it helps to assess the efficiency of the company in generating profits.

Calculation

To calculate EPS, the company's net profit (earnings) is divided by the number of shares in circulation. The result represents the profit that corresponds to each individual share.

The formula for calculating EPS is as follows:

Net profit / number of shares in circulation = EPS

EPS can be calculated for a specific period, usually annually, or for a quarter. It is also important to use the data of shares in circulation at the end of the period.

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