Earnings per share (EPS), also known as after-tax earnings per dividend and earnings per share, refers to the ratio of after-tax profits to total share capital. Whether it is the net profit that ordinary shareholders can enjoy or the net loss that each share should bear.
Earnings per share are usually used to reflect the operating results of enterprises and measure the profitability and investment risk of common stocks. It is one of the important financial indicators for investors and other information users to evaluate the profitability of enterprises, predict the growth potential of enterprises, and then make relevant economic decisions. In the income statement, Article 9 lists the items of "basic earnings per share" and "diluted earnings per share".
Earnings per share can reflect the operating performance of an enterprise, and can also measure the profitability and risk of a stock. As stock investors, we can judge the profitability of an enterprise and predict its future development potential, thus helping us to choose stocks better. Therefore, the higher the earnings per share, the stronger the company's profitability. If the company's shares are fully circulated, then the net income of the shares is the company's after-tax net profit. If the company has preferred shares, it needs to subtract the dividends allocated to the preferred shares from the after-tax net profit when calculating the net income per share.
Everyone here should understand the significance and function of earnings per share. Net income per share is the ratio of the net income of listed companies in the current year to the total number of ordinary shares, which can be divided into two types according to the value of the number of shares:
Fully diluted net income per share refers to the total number of ordinary shares at the end of the year when we calculate. Because new-style stocks are usually issued at a premium, new and old shareholders can also share the income of listed companies before the issuance of new shares, so this method is called fully diluted net income per share.
Weighted net income per share When calculating the total number of shares, the number of shares is weighted monthly. This is because the capital invested by the company is different, so the basis for generating income is different.
In short, earnings per share can help us better understand the profitability and operational management capabilities of listed companies, and it is an indispensable reference index when we do stock fundamental research.