This earnings per share calculator serves as an indicator of a company’s profitability. So, use our EPS calculator to handle the profitability of a company depending on net income, preferred dividends, and the number of outstanding common shares.

## What is Earnings Per Share?

**“Earning per share is a financial measuring term that indicates how much a company makes a profit per share of its common stock”. **

#### Why is it Important:

It is a widely used metric to analyze the performance and profitability of different companies. A higher EPS shows that a company generates more profit and that its stock is worth more while a low EPS value indicates a company has a high debt load.

## Earning Per Share Formula:

Our earnings per share calculator is an accurate and reliable tool for investors, analysts, and anyone else who needs to calculate EPS. To understand how EPS is calculated view the formula below:

**Earning Per Share (EPS) = Net Income - Dividends / Common Shares **

Where:

**Net Income**is a profit that is concluded after paying all types of expenses including taxes.**Dividends**are the portion of a company's profits that is distributed to its shareholders.**Common Share**indicates the ownership in a company and to vote on corporate matters and receive dividends.

## How to Calculate Earnings Per Share:

It is important to note that generated revenue per share can be determined for different periods of time by taking into service the earnings per share calculator. Let us examine an example that describes the purpose of a tool in a better way.

### Practical Example:

Suppose a Digital Marketing which assumes the following financial details:

- Net Income = $500,000
- Preferred Dividends = $50,000
- Average Common Shares = 200,000

#### Solution:

Our earning per share calculator demonstrates how to determine EPS by starting with net income, adjusting for any preferred dividends, and then dividing by the average outstanding common shares.

**Step # 1 _ Calculate Earnings for Common Shareholders:**

Earnings for Common Shareholders = Net Income - Preferred Dividend $$

= $500,000 - $50,000

= $450,000 $$

**Step # 2 _ Calculate Earnings Per Share (EPS):**

Earnings per share calculation utilizes the following formula:

EPS = Earnings for Common Shareholders / Average Outstanding Common Shares

= $450,000 / $200,000

= $2.25

## How our Earnings Per Share Calculator Functions:

The EPS calculator allows you to determine the EPS for any company, public or private fast and accurately! Providing the following values is required to make it work:

#### To Get Started, Type in:

- Insert the Dividends(D) value
- Enter Net Income(I) and Common Shares(S)

#### Result Summary:

- Earning per share (EPS)
- Complete calculation in steps

## FAQs:

### What is Basic and Diluted EPS?

Basic EPS provides a conservative measure of earnings per share without considering the impact of potential dilution while on the other side, diluted EPS indicates a more conservative measure that accounts for the potential dilution in the company's shares.

### How Does EPS Impact Stock Prices?

EPS serves as a fundamental metric to monitor the profitability of a company. As EPS increases there is also consequently the higher demand for company shares which causes the stock price to rise, and vice versa

## Reference:

**Wikipedia: **Earnings per share, calculations, Diluted earnings per share,