1. What is Earnings Per Share?

Earnings Per Share (EPS) is a key financial metric that shows how much profit a company generates 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 basic EPS formula:

Where:

• \( Income \) — Net income in USD
• \( Dividends \) — Preferred dividends paid in USD
• \( Shares \) — Weighted average shares outstanding

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 measure of corporate profitability that investors use to evaluate a company's financial health and compare it with other companies.

4. Using the Calculator

Tips: Enter income and dividends in USD, and number of shares outstanding. All values must be valid (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 convertible securities.

Q2: What is considered a good EPS?
A: Higher EPS is generally better, but interpretation depends on industry, company growth stage, and other financial metrics.

Q3: Why subtract preferred dividends?
A: EPS reflects earnings available to common stockholders, so preferred dividends (which go to preferred shareholders) are excluded.

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

Q5: Can EPS be negative?
A: Yes, negative EPS indicates the company is losing money (net loss).