# Earnings Per Share Calculator

## About Earnings Per Share Calculator (Formula)

An Earnings Per Share (EPS) Calculator is a financial tool used to calculate the earnings per share for a company, indicating the portion of a company’s profit allocated to each outstanding share of common stock. EPS is a key financial metric that helps investors and analysts assess a company’s profitability and its ability to generate earnings for shareholders. The formula for calculating earnings per share is:

Earnings Per Share (EPS) = (Net Income – Preferred Dividends) / Weighted Average Number of Common Shares Outstanding

Where:

• Net Income: The total profit of the company after deducting all expenses, taxes, and interest.
• Preferred Dividends: Dividends paid to preferred shareholders, if any.
• Weighted Average Number of Common Shares Outstanding: The average number of common shares outstanding over a specific period, accounting for any changes in the number of shares during that period.

For example, if a company has a net income of \$1,000,000, preferred dividends of \$50,000, and the weighted average number of common shares outstanding is 500,000 shares, the earnings per share would be:

EPS = (\$1,000,000 – \$50,000) / 500,000 = \$1.90 per share

This means that the company generated \$1.90 in earnings for each outstanding share of common stock.

The Earnings Per Share Calculator is an important tool for investors, financial analysts, and company executives to evaluate a company’s financial performance and compare it with industry peers. EPS is often used as a basis for determining the company’s valuation and making investment decisions. However, it’s crucial to interpret EPS in the context of other financial metrics and factors affecting a company’s operations and growth potential.