How to Calculate Earnings Per Share (EPS)

Earnings Per Share (EPS) measures the profit attributable to shareholders to the number of shares in issue. It is calculated by dividing the total profit available to ordinary shareholders by the total number of ordinary shares. (Note: Total profit available to ordinary shareholders = Net profit after tax − Preference dividend)

Learn how to calculate EPS with the following examples:

Example 1:
ABC Company makes a net profit of $800,000, and pays out $10,000 in preferred dividends. It has 1,000,000 ordinary shares for half of the year and 2,000,000 ordinary shares for the other half year. Then:
Total profit available to ordinary shareholders = 800,000 - 10,000 = $790,000
Number of shares outstanding (weighted average) = (1,000,000 * 0.5 + 2,000,000 * 0.5) = 1,500,000
EPS = 790,000 / 1,500,000 = $0.53

Example 2:
UOL Ltd has the following data:
Ordinary shares of $0.50 each: $100,000
10% Preference shares of $0.50 each: $50,000
12% Loan stock $60,000
Net profit after tax $65,000
Ordinary share dividends $10,000
Preference share dividends $5,000

Then,
Number of ordinary shares = $100,000 / $0.50 = 200,000
Earnings per share = (65,000 - 5,000) / 200,000 = $0.30

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