19 Mar 2018

What is Earning Per Share (EPS)

Finance feed by:

CA Amarendra Agarwal
B.com (Hons),CA
CA in Practice
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   •    24 Year 4 Month  experience

Earnings per share or EPS is an important financial measure, which indicates the profitability of a company. It is calculated by dividing the company’s net income with its total number of outstanding shares. It is a tool that market participants use frequently to gauge the profitability of a company before buying its shares. 

EPS is the portion of a company’s profit that is allocated to every individual share of the stock. It is a term that is of much importance to investors and people who trade in the stock market. The higher the earnings per share of a company, the better is its profitability. While calculating the EPS, it is advisable to use the weighted ratio, as the number of shares outstanding can change over time. 

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