How To Calculate Earning Per Share (EPS)?

Short tutorial on How To Calculate Earning Per Share (EPS).

EPS Calculation

Earnings Per Share (EPS) is the amount of money each share of the shareholders stock earned for the company. It is one of the important metric in business in assessing a companys profitability. The companys balance sheet and income statement are the two vital parameters assessed to calculate the EPS. The earnings per share is calculated by dividing the total earnings of the company by the outstanding shares.

This is a short tutorial that helps you understand how to calculate Earning Per Share (EPS) based on the companys financial statement with a step-by-step instructions. Formula:

Earning Per Share (EPS) = Total Earning / Outstanding Shares
Total Earnings = Net Income - Preferred Dividends Example:

A
company has a net income was Rs.10 lakh, and it paid Rs.1 lakh to preferred shareholders, and the company had Rs.20 lakh outstanding shares. Calculate the Earning Per Share EPS.

Step 1:
Given,
Net income = Rs.10 lakh
Preferred Dividends = Rs.1 lakh Step 2:Find Total Earnings,
Applying the values in the formula,
Total Earnings = Net Income - Preferred Dividends
Total Earnings = 10 - 1 = 9 lakh Step 3:
Find Earnings Per Share (EPS),
Earning Per Share (EPS) = Total Earnings / Outstanding Shares
EPS = 9 lakh / 20 lakh
EPS = 0.45 lakh 