Earnings per share
From ACT Wiki
Financial ratio analysis - performance ratios.
(EPS or eps).
EPS measures the annual profits earned for each ordinary share in a company.
In simple terms, EPS is calculated as:
Profits ÷ number of shares
Defining these terms more strictly, they are:
Profit after tax attributable to ordinary shareholders ÷ Weighted average number of shares in issue during the period.
Profit after tax attributable to ordinary shareholders is often known as 'earnings' or 'net profit'.
- EPS example
- Earnings for the period are £40 million and the weighted average number of shares is 50 million.
- EPS = £40m / 50m
- = £0.80 (= 80 pence)
Relevant accounting standards for the consistent calculation and reporting of Earnings per share include IAS 33 and Section 1 of FRS 102.
See also
- Adjusted earnings
- Basic earnings per share
- Bootstrap effect
- Diluted earnings per share
- DPS
- Earnings
- Economic value added
- IAS 33
- FRS 102
- Net profit
- NOSH
- Ordinary shares
- Pence
- Price to earnings ratio
- Profit attributable to ordinary shareholders
- Reported earnings
- Shareholder value
- Total shareholder return
- Weighted average
