Earnings per share (EPS) are the earnings returned on the initial investment amount.

The FASB requires companies' income statements to report EPS for each of the major categories of the income statement: continuing operations, discontinued operations, extraordinary items, and net income. The Financial Accounting Standards Board is a major organization to develop Generally Accepted Accounting Principles in the United States (US GAAP) along with SEC, AICPA, and GASB. It was created in 1973 and replaced its predecessor, the Accounting Principles Board and the Committee on Accounting Procedure of the American Institute... Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. ...

The EPS formula does not include preferred dividends for categories outside of continuing operations and net income as shown here. This formula also shows the most basic formula for earnings per share.

The EPS formula is shown here for Net Income and Continuing Operations (substitute income from continuing operations for net income).

Earnings per share for continuing operations and net income are more complicated in that any preferred dividends are removed from net income before calculating EPS. Remember that preferred stock rights have precedence over common stock. If preferred dividends total $100,000, then that is money not available to distribute to each share of common stock.

The value used for company earnings can either be the last twelve months' Net income (referred to as trailing-twelve-months, or ttm), or analysts' predictions for the next twelve months' net income (referred to as forward). Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. ...

The number of shares used for the calculation can either be basic (only shares that are currently outstanding) or diluted (includes all shares that could potentially enter the market). Diluted EPS is a companys EPS figure as calculated using fully diluted shares outstanding (i. ...

Companies often use a weighted average of shares outstanding over the reporting term. EPS can be calculated for the previous year ("trailing EPS"), for the current year ("current EPS"), or for the coming year ("forward EPS"). Note that last year's EPS would be actual, while current year and forward year EPS would be estimates.

References

See also

• whisper number