Earnings per share: Difference between revisions
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* [[FRS 102]] | * [[FRS 102]] | ||
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* [[Ordinary shares]] | * [[Ordinary shares]] | ||
* [[Pence]] | * [[Pence]] | ||
Revision as of 11:24, 14 June 2023
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 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.
