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EPS Calculator

EPS Equation:

\[ EPS = \frac{(Net\ Income - Dividends)}{Shares} \]

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1. What is EPS?

Earnings Per Share (EPS) is a financial metric that indicates how much profit a company makes for each share of its stock. It's calculated by dividing net income minus dividends by the number of outstanding shares.

2. How Does the Calculator Work?

The calculator uses the EPS equation:

\[ EPS = \frac{(Net\ Income - Dividends)}{Shares} \]

Where:

Explanation: The equation 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 key indicator of a company's profitability and is widely used by investors to evaluate stock performance and compare companies.

4. Using the Calculator

Tips: Enter net income and dividends in USD, and shares as a whole number. All values must be valid (net income ≥ 0, dividends ≥ 0, shares > 0).

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 potential shares from options, warrants, etc.

Q2: What is a good EPS value?
A: Higher EPS is generally better, but it varies by industry. Compare to competitors and historical performance.

Q3: Why subtract dividends in the calculation?
A: Only for preferred dividends. Common stock dividends are already deducted from net income.

Q4: How often is EPS calculated?
A: Typically quarterly and annually, reported in financial statements.

Q5: What are limitations of EPS?
A: Doesn't account for capital structure and can be manipulated through share buybacks.

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