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Finance: What is Earnings Per Share (EPS)? 33 Views
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What is Earnings Per Share (EPS)? Earnings Per Share is a metric by which to measure the profitability of a public company as a result of how much profit per common share was generated, after accounting for any dividends and both the weighted average of common shares as well as diluted shares when including warrants, stock options, restricted shares, and possible debt to equity common shares via convertible bonds or preferred shares.
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Transcript
- 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?
Full Transcript
- 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
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