Earnings per share

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Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company.

In the United States, the Financial Accounting Standards Board (FASB) requires EPS information for the four major categories of the income statement: continuing operations, discontinued operations, extraordinary items, and net income.

Calculating EPS[edit]

Preferred stock rights have precedence over common stock. Therefore, dividends on preferred shares are subtracted before calculating the EPS. When preferred shares are cumulative, annual dividends are deducted whether or not they have been declared. Dividends in arrears are not relevant when calculating EPS.

Earnings per share (basic formula)

\mbox{Earnings Per Share}=\frac{\mbox{Profit- Preferred Dividends}}{\mbox{Weighted Average Common Shares}}

Earnings per share (net income formula)

\mbox{Earnings Per Share}=\frac{\mbox{Net Income - Preferred Dividends}}{\mbox{Average Common Shares}}

Earnings per share (continuing operations formula)

\mbox{Earnings Per Share}=\frac{\mbox{Income from Continuing Operations - Preferred dividends}}{\mbox{Weighted Average Common Shares}}

External links[edit]

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