How do you calculate Earnings Per Share (EPS)?

To calculate Earnings Per Share (EPS), you divide the company's net income by the number of shares outstanding. This metric is crucial for investors as it indicates how much money a company makes for each share of its stock, giving a clear insight into the company's profitability on a per-share basis. A higher EPS typically signals better profitability and can influence the stock price and investors' decisions.

The formula can be expressed as:

EPS = Net Income / Shares Outstanding

This approach effectively distributes the company's profit across all of its outstanding shares, allowing stakeholders to assess their portion of the earnings relative to their investment. A solid understanding of EPS is important in evaluating a company's financial health and performance, particularly in comparison to its competitors.