1. What is Earnings Per Share (EPS)?

Earnings Per Share (EPS) is a financial metric that measures the amount of a company's profit allocated to each outstanding share of common stock. It serves as an indicator of a company's profitability and is widely used by investors to evaluate company performance.

2. How Does the EPS Calculator Work?

The calculator uses the basic EPS formula:

Where:

• \( Net Income \) — Company's total earnings
• \( Preferred Dividends \) — Dividends paid to preferred shareholders
• \( Weighted Average Shares Outstanding \) — Average shares over reporting period

Explanation: The formula calculates how much money each share would get if all profits were distributed.

3. Importance of EPS Calculation

Details: EPS is a key metric in fundamental analysis, used in P/E ratios, and directly impacts stock valuation. Higher EPS generally indicates greater value.

4. Using the Calculator

Tips: Enter profit in USD (net income minus preferred dividends) and weighted average shares outstanding. Both values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between basic and diluted EPS?
A: Basic EPS uses current shares, while diluted EPS accounts for potential shares from convertible securities.

Q2: What is a good EPS value?
A: There's no universal "good" EPS - it depends on industry, company growth stage, and market conditions.

Q3: Why use weighted average shares?
A: Weighted average accounts for share count changes during the reporting period.

Q4: Can EPS be negative?
A: Yes, if the company has a net loss, EPS will be negative.

Q5: How often is EPS calculated?
A: Public companies report EPS quarterly and annually in financial statements.