Q:

# How can you calculate earnings per share?

A:

To calculate earnings per share, evaluate the total income generated by the company and the number of shares issued. Subtract dividend paid from net income, and divide by the average number of outstanding shares.

## Keep Learning

1. Calculate earnings

Calculate the total earnings of the company. Use the statement of comprehensive income and other official documents to gather the figures required. Use revenue and expense statements to calculate net profit and to showcase the earnings of the company.

2. Determine number of shares

To calculate the number of shares issued by the company, analyze the previous year’s audited financial statements. The statements generally list number of shares issued as of the last financial year. Add any further shares issued by the company during the ongoing financial year for a current total.

3. Obtain dividend of preference shares, and evaluate

Use company data to get the dividend paid out to preference shares. Subtract this sum from the net income to arrive on the earning that is "leftover." Finally, divide this number by the number of outstanding shares to calculate earnings per share. The average is taken to accommodate the variance in the sale and purchase of stocks. Using figures from step 1 and step 2, evaluate with the formula (earnings per share = (net income - dividend on preference shares) / average outstanding shares).

Sources:

## Related Questions

• A: EBITA is a financial acronym for a company's earnings before interest, depreciation and amortization. It is a company's net income before the specified ded... Full Answer >
Filed Under:
• A: An article in the Houston Chronicle states that incremental profits are an indication of a company's growth rate due to how it chooses to spend its capital... Full Answer >
Filed Under:
• A: Cost/income ratio shows a company's expenses in conjunction with its income, according to MoneyWeek. This is done by dividing the operating costs, which in... Full Answer >
Filed Under:
• A: Debt service coverage ratio is calculated by dividing a company's net operating income by its total debt service costs. Also known as earnings before inter... Full Answer >
Filed Under:
PEOPLE SEARCH FOR