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Ratios: Earnings Per Share (EPS) definitions

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  • Earnings Per Share
    A profitability ratio showing the portion of a company's net income allocated to each share of common stock.
  • EPS
    A common abbreviation for the ratio that measures income earned per share of common stock.
  • Income Statement
    A financial report where net income and earnings per share are displayed, typically at the bottom.
  • Net Income
    The total profit of a company after all expenses, used as the starting point for calculating EPS.
  • Preferred Dividends
    Payments made to preferred stockholders before any earnings are distributed to common stockholders.
  • Common Stock
    Equity shares representing ownership in a company, whose holders are entitled to earnings per share.
  • Average Number of Shares
    The mean of beginning and ending balances of common shares outstanding, used in the EPS denominator.
  • Profitability Ratio
    A financial metric used to assess a company's ability to generate earnings relative to its revenue or assets.
  • Basic EPS
    The standard calculation of earnings per share, excluding potential dilution from convertible securities or options.
  • Diluted EPS
    A more complex version of EPS that accounts for possible increases in shares from options or convertible debt.
  • Convertible Debt
    A type of bond or loan that can be exchanged for a predetermined number of common shares, potentially affecting EPS.
  • Employee Stock Options
    Contracts granting employees the right to purchase company shares, which can increase the total shares outstanding.
  • Outstanding Shares
    The total number of common shares currently held by shareholders and used in EPS calculations.
  • Trend Analysis
    The process of evaluating changes in EPS over time to assess a company's financial performance.