How is earnings per share calculated?

Earnings per share (EPS) is a financial metric used to measure a company's profitability. EPS is calculated by dividing the net income earned by a company by the total number of outstanding shares. Net income is the company's total revenue minus all expenses, taxes, and interest for a specific period. It is obtained from the company's income statement. The total number of outstanding shares represents the shares that are currently held by investors and are available in the market. EPS provides important information to investors as it helps them understand how much profit a company is generating on a per-share basis. A higher EPS is generally considered positive as it indicates higher profitability.

This mind map was published on 23 August 2023 and has been viewed 107 times.