how to calculate earnings per share for beginners (animated video) - Professor Savings
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What is a earnings per share?
Welcome to Professor Savings. We teach finance basics.
Hi I’m your host today Rayfil Wong.
Ttoday we are going to talk about earnings per share.
As an investor, earnings per share research can possibly help you compare two distinct companies.
let’s roll
Earnings per share (EPS) is the monetary value of earnings per each outstanding share of a company’s common stock.
But lets dive into an example.
EPS is calculation.
A companies’s profit subtracted by company dividends divided by number of share outstanding.
Naomi has money to invest and is deciding to invest comparing two companies.
Jen.com sells auto online has $1,000,000 profit minus $100,000 100,000 outstanding shares
$10,000,000 minus $100,000 divide by 100,000= $9 Earnings per share
Fredpetfood.com has $3,000,000 profit paid $300,000 dividends and has 200,000 outstanding shares
Let’s do the math
$3,000,000 minus 300,000 divide by 200,000 equals 13.5 eps
Let’s do some comparing.
Fred has a higher EPS $13.5 compared to Jen’s auto of $9.
This at least helps you compare two companies in different sector compare ratios.
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