Earnings per share

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
• Weighted average