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How to calculate earnings per share in 2 minutes

What is a earnings per share?

Welcome to Professor Savings. We teach finance basics.

Hi I’m your host today Rayfil Wong.

Ttoday we are going to talk about earnings per share.

As an investor, earnings per share research can possibly help you compare  two distinct companies.

let’s roll

Earnings per share (EPS) is the  monetary value of earnings  per each  outstanding share of a company’s common stock.

But lets dive into an example.

EPS is calculation.

A companies’s  profit subtracted by company dividends divided by number of share outstanding.

Naomi  has money to invest and is deciding to invest comparing two companies.

Jen.com  sells auto online has $1,000,000 profit minus $100,000 100,000 outstanding shares

$10,000,000 minus $100,000  divide by 100,000= $9 Earnings per share

Fredpetfood.com has $3,000,000 profit paid $300,000 dividends and has 200,000 outstanding shares

Let’s do the math

$3,000,000 minus 300,000 divide by 200,000 equals 13.5 eps

Let’s do some comparing.

Fred has a higher EPS $13.5 compared to Jen’s auto of $9.

This at least helps you compare two companies in different sector compare ratios.

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