Basic Earnings Per Share (EPS)
Understanding Basic EPS
Earnings Per Share (EPS) measures the amount of profit attributable to each outstanding common share. Investors frequently use EPS to compare company performance across reporting periods and among competitors.
Basic EPS = (Net Income − Preferred Dividends) ÷ Weighted Average Common Shares Outstanding.
Note
Weighted average shares are used because the number of shares may change throughout the year.
Summary
Basic EPS shows the earnings available to each common share based on actual shares outstanding.