# 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 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.