Earnings is the net income or net profit made by a company.This is the first and most important factor in analyzing a company for large groups of investors.
Earnings Per Share (EPS) is the total profit made by a company divided by the number of outstanding shares of that company.
You calculate the EPS by dividing the 12 month earnings or profit of a comapny for any financial year by the number of shares it currently has outstanding.
Thus, if company ABC Ltd. has 1 lakh shares outstanding and has earned Rs.50 lakhs in financial year 2006-2007, it has an EPS of Rs.50.
Rs.5000000
--------------- = Rs. 50 in Earnings Per Share (EPS)
100000 shares
Friday, August 24, 2007
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