Our EPS Calculator provides an accurate way to measure earnings per share, a vital metric that sheds light on a company’s profitability relative to its available shares.

EPS Calculator: Calculate Earnings Per Share

EPS Calculator: Calculate Earnings Per Share

This is the standard version of the calculator to compute earnings per share. A more comprehensive version can be found further down the webpage.

ⓘ Enter the company's net income for the period under review.
ⓘ Enter the total number of the company's outstanding shares.

Advanced EPS Calculator (Including Preferred Shares)

Our Advanced EPS Calculator is tailored for companies with both common and preferred shares in their capital makeup, factoring in the intricate impact of preferred dividends.

This tool delivers a more detailed EPS figure for common shares, making it especially valuable when preferred dividends are significant or when a deep dive into corporate earnings is required.

Advanced EPS Calculator

Advanced EPS Calculator

This is the advanced version, which allows you to calculate EPS while considering both common and preferred shares.

ⓘ Enter the company's net income for the period under consideration.
ⓘ Enter the total amount of dividends paid to preferred shareholders.
ⓘ Enter the total number of outstanding common shares of the company.

Grasping Basic EPS

Earnings per share (EPS) is a fundamental gauge of a company’s financial success. It shows the slice of profit assigned to each outstanding common share. The standard formula for calculating EPS is:

\( \text{EPS} = \frac{\text{Net Income}}{\text{Number of Outstanding Shares}} \)

Here, Net Income is the total profit left after subtracting all costs, taxes, and interest. The Number of Outstanding Shares covers all shares held by investors, including those owned by institutions and restricted shares in the hands of company insiders and executives.

Sample Calculation

Imagine a company with a net income of $4,500,000 and 2,000,000 shares in circulation. The EPS would be calculated as:
\( \text{EPS} = \frac{4,500,000}{2,000,000} \)

This simplifies to:

\( \text{EPS} = 2.25 \)

This outcome reveals an EPS of $2.25, meaning the company earned $2.25 per share during that period. EPS is a pivotal indicator of per-share profitability, frequently used by investors to evaluate companies across different scales and sectors.


How Common and Preferred Shares Affect EPS

Distinguishing between common and preferred shares is essential for a precise EPS calculation and a true picture of a company’s financial standing.
Common Shares:

Common shares signify basic ownership in a company and often include voting privileges. The EPS for these shares highlights profitability by showing the earnings portion tied to each common share.

For an exact EPS, it’s crucial to consider the full count of outstanding common shares. This ensures the EPS mirrors the earnings accessible to common shareholders, giving investors a transparent look at the company’s financial vitality.

Preferred Shares:

Preferred shares, unlike common ones, typically lack voting rights but guarantee fixed dividend payouts. These dividends are paid out before any profits reach common shareholders.

When calculating EPS, subtracting preferred dividends from net income is a must. This step matters because those dividends are earnings unavailable to common shareholders. By adjusting for them, the advanced EPS calculator offers a sharper view of earnings linked to common shares.

Effect on EPS:

Factoring in both common and preferred shares provides a fuller understanding of a company’s finances. If large preferred dividends are overlooked, the EPS for common shares could be inflated, giving investors a skewed sense of profitability.

By carefully computing EPS with attention to both share types, investors gain a clearer perspective for judging investment value and potential. This detailed method keeps EPS a trustworthy measure of a company’s earning strength and stability in today’s intricate market landscape.

MORE FINANCE-TOOLS: