How to Calculate Earnings Per Share Profit?


Earnings Per Share is also known as Profit earned per share is financial term and represents a portion of the profit of a company’s profit that’s allotted to every single outstanding share of common stock. The EPS is a useful measure of profitability, and it offers a clear view of the comparative earning power of the businesses or companies when we compared other similar companies with EPS. Generally, investors look for those companies with steady increasing EPS. EPS is like an indicator of a company’s profitability, and can be calculated by this formula:

Remember, when you are calculating EPS, it is very important for you to use a weighted average number of shares outstanding over the reporting term as we know that the outstanding shares can be changed over time.
Now understand how to calculate Earnings per share with the help of an example that is given below:
Suppose on January 1, 20011 XYZ Company had 260,000 common shares outstanding and 20,000 preferred shares and $100 par value, 6%. However, on September 1, 2011 the company issued 50,000 additional common shares. The Net income of the XYZ Company is $1,247,230 on 2011. The Preferred dividends will be calculated as:

By this way you can calculate Earnings per Share very easily and comfortably. But, doing calculation, you must make a note of the number of shares outstanding. Remember, the more share involved, the more diluted the EPS results will be. Generally, EPS term used in place of the total earnings reported by the company, and is broadly used by people because it is a simple way to represent that how profitable a company is truly.  The more the company is profitable the more its share value in the stock market and you can huge amount of money by purchasing its share. Intraday tips providers also calculate Earnings per Share of companies for providing right day trading tips, Share tips and Stock future tips. The earnings per share figure used for one of the most common indicators of any company’s financial position, called the price/earnings ratio. Most of stock market investors do these calculations on their own. It does not matter whether you are an experienced or beginner trader and looking for high performance on trading, then select the best company from where you can get best Nifty future tips to earn huge profit on your investment.


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