how to compute earnings per share?

Answer 1

The portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.

Calculated as:
Net Income - Dividends on Preferred Stock divided by
Average Outstanding Shares


In the EPS calculation, it is more accurate to use a weighted-average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.

Diluted EPS expands on the basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.


In summary:
Earnings per share (EPS) - The amount of corporate earnings available to common stock shareholders.

The formula is net income less preferred dividends divided by number of shares outstanding.

Fully diluted earnings per share means that all common stock equivalents (convertible bonds, preferred stock, warrants, and rights) have been included along with the common stock.

This is the worse case scenario amount that would be available.

Answer 2

Compute Earnings Per Share

Answer 3

Net Income minus Dividends on preferred stock divided by outstanding shares