What is earnings per share?
submitted by enrique

binoy

Earning per share means the profit which you get for each share. Suppose you buy 10 shares for $10. You spent $100. Now you sell 10 shares for $12. Your gross earnings are $120. So your net profit (earnings) is 120 - 100 = $20. Now you divide your net earnings by your total shares, which is 20 / 10 = $2 per share. Your earnings per share would be $2.

ABEL H/GIORGIS

It is the proportion of total stock holders equity over total outstanding shares.

Dewey Cheatham

You can use the earnings per share calculator here.

Warner Brandes

@Abel

It's not just the equity over the number of shares. That would just give you the value per share. Rather, it's the amount that was earned per share--meaning you have to subtract the amount you originally paid for a share from the amount you are selling it for.

The point is to see how much your shares have increased. So, in the example given by Binoy, if you bought the shares for $10 each and sold them for $12 each, your earnings per share is $2, regardless of how many shares you bought.