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
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2 comments:
that can also be doen quarterly. and its not that simple. EPS is broken into - GAAP EPS, non-GAAP EPS, EPS from continuing ops, etc etc.
this is the basic definition of EPS....as i said this site will start from basics first....I totally appreciate ur knowledge...but do remember for starters all this would be very difficult to understand...lets try to make it simple and then go on to advanced topics once basic idea becomes clear to new investors....
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