What is EPS — EPS Meaning: Any company has millions to crores of shares and how much profit the company earns on its one share, it is called EPS.
EPS Full Form is Earning Per Share it means Earning Per Share.
EPS helps in knowing how the business of a company is doing. When a company does business, it earns profit from it, and to find out how much that profit is on a share of the company, EPS (Earning Per Share) is seen.
How EPS is Calculated
To calculate the EPS of any company, you need to know about two things of that company, one is the net profit of that company and the other is the total shares of the company.
Earning Per Share Formula
EPS Formula= Total Net Profit / Total Number of Share
When the company’s quarterly or annual net profit is divided by the total shares of the company, then the company’s EPS (Earning Per Share) comes out.
Suppose there is a company that has a total of 1 lakh shares in the market and that company earned 50 lakh rupees at the end of the year, then the EPS of that company will be — (5000000 / 100000) = 50 Rupees.
This means that the company makes a profit of Rs.50 on its one share.
EPS is used to compare two companies in the same industry. In this, the EPS of one company is mixed with the EPS of other rival companies, if the EPS is more than the other rival companies, then the company is doing good business and if the EPS of the opposing company is less than the company’s EPS, then the company’s business is compared to the opposite. I am not good.
Conclusion of EPS
EPS is used to assess the business and financial condition of any company. Before investing in any company in the stock market, one must see the EPS of that company and compare it with the EPS of its rival company. Whether the shares of a company are available at an expensive price or at a cheap price, it is known by its EPS (Earning Per Share) and PE Ratio.
