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# Earnings per share (EPS) formula calculator

## Description

Calculate Earnings per Share (EPS) - a vital financial metric for investors. EPS reveals a company's profitability per common share and is a key factor in investment decisions. Our user-friendly EPS calculator computes this crucial figure using the formula: EPS = (Net Income - Dividends on Preferred Stock) / Average Number of Outstanding Common Shares. Understand a company's earnings distribution and assess its financial performance with ease.

## Info

### Useful links

- Price-to-Earnings (P/E) calculator
- Earnings before interest and taxes (EBIT) calculator
- Return on investment (ROI) calculator
- Compound interest calculator

### Earnings per Share (EPS) Formula Guide

### What is EPS?

Earnings per Share (EPS) is a vital financial metric that provides insights into a company's profitability on a per-share basis. Investors frequently use EPS to assess a company's financial performance and profitability. This formula reveals how much of a company's earnings are attributed to each outstanding common share of stock.

### How to Use the EPS Formula

To calculate EPS, use the following formula:

```
EPS = (Net Income - Dividends on Preferred Stock) / Average Number of Outstanding Common Shares
```

Let's break down the components:

**Net Income**: This is the company's total profit after expenses, taxes, and interest.**Dividends on Preferred Stock**: Subtract these if there are preferred stock dividends.**Average Number of Outstanding Common Shares**: Calculate the weighted average of common shares outstanding over a specific period.

**Example**:

Suppose a company has a net income of $1000000, no dividends on preferred stock, and 500000 common shares outstanding.

EPS = ($1000000 - $0) / 500000 = $2 per share.

### How to Use the Calculator

- Enter the Net Income.
- If the company has Dividends on Preferred Stock, include this amount.
- Provide the Beginning and Ending Number of Common Shares outstanding during the period.
- The calculator will automatically compute the EPS.

### Frequently Asked Questions (FAQ)

#### Q1: Why is EPS important for investors?

EPS is essential because it helps investors understand how much profit a company generates for each share of common stock. It aids in assessing a company's profitability and making informed investment decisions.

#### Q2: What's the difference between basic and diluted EPS?

Basic EPS considers only common shares outstanding, while diluted EPS takes into account the potential impact of convertible securities (like stock options or convertible bonds).

#### Q3: Can EPS be negative?

Yes, EPS can be negative if a company's net income is negative. This typically indicates financial loss per share.

#### Q4: How often is EPS calculated?

EPS is typically calculated on a quarterly and annual basis.

### Conclusion

Earnings per Share (EPS) is a fundamental metric for investors to gauge a company's profitability. Our calculator simplifies the process of computing EPS, providing a quick and accurate assessment of a company's financial performance on a per-share basis. Understanding and utilizing EPS is crucial for making informed investment decisions in the world of finance.