Earnings per share (EPS)
Financial Accounting glossary · Stockholders' Equity
Definition
Net income available to common shareholders divided by weighted-average common shares outstanding.
Earnings per share (EPS) in plain English
EPS answers a simple question an owner would actually ask: 'How much profit did the company make for each slice of it that I own?' A company is split into shares (little ownership slices), so you take the profit that belongs to regular owners and divide it by how many shares exist. If a company earns $10 million and has 5 million shares, that's $2 of earnings per share. It's like a pizza — total profit is the pizza, shares are the slices, and EPS tells you how big each slice is, letting you compare a giant company to a small one fairly.
Also called: EPS
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