What is Earnings Per Share?

Earnings per share

Earnings per Share refers to the profit a company makes after deducting tax divided by its total outstanding shares. It is calculated by dividing a company’s profit after tax by the weighted average of outstanding shares (issued shares) of a company. Earnings per share is an important metric in valuation as it basically drills down the earnings of a company on a per share basis. As a shareholder of a company the earnings per share represents the portion of the company’s profits attributable to you. The earnings per share of most companies can be found in the bottom of its profit and loss statement.

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