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What is the formula for calculating earnings per share (EPS)?
Eps = (Net Profit-Dividend on Preferred Stock)/(Average Outstanding Shares)
EPS is a market prospect ratio that measure the amount of net income earned per share ordinary shares outaoutstand. It is calculated as follows
Earnings /Weighted average ordinary shares outstanding
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net income over outstanding shares
EPS is calculated as follows:
EPS= (net income - preferred dividends) / average outstanding common shares
As an example, suppose the fiscal year 2017 net income for Bank of America (BAC). Its net income was $18.232 billion. Its preferred stock dividends were $1.614 billion. Its average outstanding common shares stood at 10.196 billion.1 This puts its EPS at:
Earnings =18.232 billion−1.614 billion
=16.618 billion (net profit)
EPS = 16.618 Billion / 10.196 Billion = $1.63
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