Nov 14, 2018

What is EPS/Earning Per Share

in this article, we will discuss what is EPS or how Earnings Per Share of the company calculated.



Generally, the EPS shows how a company is performing if the earning per share is high.

it means the company is doing great business and earning profits.

based on the EPS you can calculate the price to earnings ratio or PE ratio.


How EPS is Calculated

Let's assume there is a company called "ABC". which is generated the Net profit of 20 crores Rupees(or your country currency).

the total share of the company is 1 crore.

so when you will calculate the earnings of the company per share.

divide the
Net profit / Total no. of shares = EPS

20 crore / 1 crore = 20

after dividing you will get the EPS or Earning per share of the company.

in the case of company "ABC" EPS is 20 Rupees.

now you calculated the EPS of the company "ABC" so whenever you will calculate the PE ratio of the company, you can use the EPS.

similarly, there is a company "XYZ" and it has the Net profit of 15 lac rupees.

no of shares of the company is 3 lac.

the EPS of the company will be:

15 lakhs  / 3 lakhs = 5

now I think you are able to calculate EPS and knows well how To calculate the Earning of the company based on the per share.
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