What is the Earnings per Share ( EPS ) and P/E ratio ?


The price-earnings magnitude relation, additionally called P/E ratio, P/E, or PER, is that the magnitude relation of a company's share (stock) value to the company's earnings per share. The magnitude relation is employed for esteeming corporations and to visualize if they're exaggerated or underestimated.

P/E Ratio = Market esteem per share/Earnings per share


What is the Earnings per Share (EPS) Formula?

EPS may be a financial magnitude relation, which divides web earnings accessible to regular shareholders by the traditional outstanding shares throughout a selected time frame. The EPS formula indicates a company's capability to deliver web profits for normal shareholders. This guide breaks down the Earnings per Share formula intimately. 

 A single EPS associate degree incentive for one company is somewhat subjective. the quantity is additional necessary once investigated against totally different corporations within the trade, and once contrasted with the company's share value (the P/E Ratio). Between 2 corporations within the same trade with a constant variety of shares outstanding, higher EPS indicates higher productivity. EPS is often used associated with a company's share value to choose if it's moderately "modest" (low P/E ratio) or "expensive" (high P/E ratio).

Earnings per Share Formula

There square measure many ways that to work earnings per share.

The following square measure 2 versions of the earnings per share formula:

EPS = (Net financial gain – most well-liked Dividends)/End of amount Shares Outstanding

EPS = (Net financial gain – most well-liked Dividends)/Weighted Average Shares Outstanding

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