Anna Williams Posted May 14, 2020 Share Posted May 14, 2020 How to calculate the Earnings per Share ratio and what is its best use case? Quote Link to comment Share on other sites More sharing options...
0 Criss Edward Posted May 14, 2020 Share Posted May 14, 2020 (edited) Hi Anna, and thanks for coming here. Earnings per share (EPS) is arguably the most basic model to put a value on stock due to its simplicity. It is calculated by dividing the company's profit with the number of outstanding shares of its common stock. The formula to calculate EPS is as follows: Earnings per Share= End-of-Period Common Shares Outstanding/Net Income − Preferred Dividends What the EPS actually shows is how many dollars are earned by each share. As such, it is a valuation method focused on profitability since the higher EPS increases the value of the company and ultimately the price for new investors. Edited May 14, 2020 by Criss Edward Quote Link to comment Share on other sites More sharing options...
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Anna Williams
How to calculate the Earnings per Share ratio and what is its best use case?
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