ShmoopTube

00:00

finance a la shmoop what is earnings per share or EPS? okay you know the lemonade

00:09

stand the one with 20 grand in sales and 16 grand in gross profits and yeah will [Balance sheet for Lemonade Stands R Us appears]

00:14

spare you the gross jokes you know the customer asks lemonade.. what the fly

00:19

was doing in his lemonade and yes of course she said the backstroke what else

00:24

would you expect from the people at Schmo really?

00:26

so after gross profits there were operating expenses like those and then

00:31

operating profits down here that 7,500 thing then there were taxes and yeah

00:37

there are always taxes we can grumble about and then finally net income aka [Net income appears on balance sheet]

00:42

earnings but then below earnings you'll see that there are a hundred shares in

00:47

this little company the founder owns 60 of them mom owns 10 the new stepdad owns

00:53

20 he was guilted into it by you know the divorce lawyer and Enrique the

00:57

gardener for some reason who has cleverly weaseled his way into the

01:01

families arts and minds owns the last 10 its annual report time and the investors

01:06

want to know what their earnings per share were so that they can all compare

01:11

relative performance on their investments right so the total earnings

01:15

of the company in this example was five thousand two hundred fifty bucks which

01:20

means that the earnings per share of our little lemonade stand company here or

01:26

that 5,250 figure divided by a hundred or 52.50 a share that's [EPS formula appears]

01:32

what each share earned if you divvy the company into a hundred little pie slices

01:37

or parts so yeah earnings per share equals earnings per slice o pie or wait

01:43

lemonade pie has that been done yet time for a new business venture what do you [A plate of lemonade pie appears]

01:47

think we're taking investors just call us please

Full Transcript