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What is Earnings Per Share | How to Calculate EPS | Finpro Online

Earnings per share tells you what would be the share of profit each stock would get if a company distributed the entire profit among the shareholders. Read: https://www.finpro.online/2020/03/earnings-per-shareeps.html So, the Formula of earnings per share is= (net profit / total number of outstanding shares) Let's understand through an Example Suppose ABC company generated profit of Rs one lakh in a financial year and total outstanding shares of the company is one thousand. Now, earnings per share= net profit that is 1 lakh/ number of outstanding shares which is 1 thousand. So the earnings per share would be 100 That's means, if a company distributed the entire profit among the shareholders, the shareholders will receive hundread Rupess of per share. But in the reality all the profits do not given to the shareholders because most of the profits reinvest in the business for the future growth of the company and a part of the profit is given to the shareholders in the form of dividend. How to interpret of earnings per share? Earnings per share gives an idea how fast the company is growing and forecasting the future growth of the company. As an investor looking for steadily increasing its Earnings per share year on year basis. So, higher E.P.S higher profit. Remind you again, before investing in mutual funds or stocks you should evaluate multiple number of parameters. You don't rely on one parameter. Why earnings per share important? The Earnings per share metric are one of the most important variables in determining the price of a share. The earnings per share is also help to calculate the price to earnings(p/e) ratio. Earnings per share is an important metric used to evaluate take investment decision.