What is the net profit per share
Public companies have to earnings per share (EPS) under the net income of line in their report of accounts of profits and losses. This is mandated by the generally accepted accounting practices (GAAP). EPC gives investors a means to determine the amount of the company earned on his investment on the part of the stock. In other words, it tells investors how much net income EPS the shares of the company for each share they own. It is calculated by dividing net income divided by the total number of share capital. It is important to shareholders that the net income of the company must be communicated to them on a per share basis so that they want with the price of the stock market can compare.
Private businesses to the shareholders of EPS report to focus more on total net income of the company.
Publicly held companies are in fact of two figures EPS, unless you have what is called a simple structure of capital. However, most publicly held companies have complex capital structures and have two figures of the EPS. Is called the base EPS; the other is called the diluted EPS. Basic EPS is based on the number of shares which are very constructive. Diluted are based on the outstanding shares and shares can be issued in the future in the form of stock options.
It is obviously a complex process. Accountant must adapt the EPS formula for an arbitrary number of cases or changes in the business. A company can issue additional shares in the year and buy back some of its own shares. Or it could take to the different classes of shares, net revenues be divided into two or more pools-one for each class of stock will cause. A merger, acquisition or divestiture will also affect the formula of the EPS.
0 comments:
Post a Comment