How to Calculate Basic EPS

Calculating Earnings

There are three ways to earn money in the stock market: 1) share price appreciation, 2) dividends and 3) earnings. Earnings (if any) in corporations are usually distributed to shareholders on a quarterly basis. Earnings per share is a common measure that investors look at before deciding to invest in a stock. It tells investors how much each share of stock is earning and is a good basis for comparing return potential.

Instructions

1. Download or request a copy of the income statement and the balance sheet. You can find this in the annual report or the 10K which can be requested from Investor Relations or downloaded from the company's website (if any).

2. Determine the net income for the company. The net income can be found at the bottom of the income statement. Let's say the net income is $50 million for the year.

3. Determine number of outstanding stock. You will find this in the stockholder's equity section on the balance sheet. Let's say the number of outstanding stock is $50 million.

4. Divide the net income by the number of shares outstanding. Using our numbers, the equation is $50 million divided by $50 million or $1.

References

• Investopedia: EPS