In this video on Earnings Per Share Formula, we discuss the formula to calculate EPS with some practical examples.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐏𝐞𝐫 𝐒𝐡𝐚𝐫𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚?
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Earnings per share formula indicate the amount of net income each share gained over the year.

𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐏𝐞𝐫 𝐒𝐡𝐚𝐫𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Below is the formula of earnings per share

Earnings Per Share = (Net Income - Preferred Dividends) / Weights Average Number of Shares Outstanding

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐏𝐞𝐫 𝐒𝐡𝐚𝐫𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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The following data is available from Beat Tech Inc.

The net income for year 2016 – $550,000
The preferred dividends paid in 2016 – $50,000
At the beginning of year 2016, common shares outstanding were 40,000 shares.
In middle of year, Beat Tech Inc. issued another 50,000 common shares.

Find out Beat Tech Inc earnings per share.

First we need to find out weighted average number of common shares.
Here’s the calculation

Weighted average number of common shares = (40,000 * 1) + (50,000 * 0.5) = 40,000 + 25,000 = 65,000 shares.

Now we will find eps (earnings per share)

EPS formula = (Net Income – Preferred Dividends) / Weighted Average Number of Common Shares
Or. EPS formula = ($550,000 – $50,000) / 65,000
Or, EPS = $500,000 / 65,000 = $7.69 per share.

To know more about 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬 𝐏𝐞𝐫 𝐒𝐡𝐚𝐫𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚, you can go to this link here:- [ Ссылка ]

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