1. What is Earnings Per Share (EPS)?

EPS is a company's net profit divided by the number of common shares it has outstanding. It indicates how much money a company makes for each share of its stock and is a key metric for profitability.

2. How Does the EPS Calculator Work?

The calculator uses the basic EPS formula:

Where:

• \( Net\ Income \) — Company's total earnings (USD)
• \( Preferred\ Dividends \) — Dividends paid to preferred shareholders (USD)
• \( Weighted\ Average\ Shares\ Outstanding \) — Average shares over reporting period

Explanation: The formula shows the portion of a company's profit allocated to each outstanding share of common stock.

3. Importance of EPS Calculation

Details: EPS is a critical metric used by investors to assess a company's profitability and to compare companies. Higher EPS generally indicates greater value.

4. Using the Calculator

Tips: Enter net income and preferred dividends in USD, and shares outstanding as a whole number. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between basic and diluted EPS?
A: Basic EPS uses current shares outstanding, while diluted EPS accounts for all possible shares that could be created through options, warrants, etc.

Q2: What is considered a good EPS?
A: There's no absolute threshold - it depends on the industry and company growth. Compare to competitors and historical performance.

Q3: Why subtract preferred dividends?
A: EPS reflects earnings available to common shareholders. Preferred dividends are paid before common shareholders get anything.

Q4: How often is EPS calculated?
A: Public companies report EPS quarterly and annually in their financial statements.

Q5: Can EPS be negative?
A: Yes, if a company has a net loss. This means the company is losing money per share.