Earnings Per Share

Basic earnings per share (EPS) is calculated by taking the company's net income, minus preferred dividends, and dividing the sum by the weighted average number of shares outstanding. Earnings per share is helpful when comparing one company to another, assuming they are in the same industry.

For example: Company A had earnings of $100 and 10 shares outstanding, so their EPS is 10. ($100 / 10 = 10).

Another way to calculate EPS is by using the Treasury Stock Method.