Earnings per Share or EPS is calculated by dividing the profit after taxes or net profits by the total number of outstanding shares of a company. EPS indicates how much money the company is making per share.
So if a company made $100 as net profits and had 100 shares outstanding in the market, their EPS would be $1.
This calculation helps an investor to judge the profitability of the company. EPS is also needed to calculate the P/E ratio of a stock which is another popular way of estimating the price of a company.
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