EPS Formula:
 |
| EPS Formula |
Definition:
Earnings Per Share (EPS)
means the 'Net Profit' or 'Profit After Tax (PAT)' of a company reduced or converted to
a single share.
Significance:
EPS is the important,
denominator component in calculating Price
to Earnings Ratio.
Example:
Let us consider the example of the EPS of SJVN Ltd., a company listed on Indian stock exchanges, for the financial year ending on 31st March 2015. |
| Example Calculation of EPS of SJVN Ltd. |
The explanation of what is price to earnings ratio is especially helpful for anyone starting to learn fundamental analysis. The ratio compares a company’s share price with its earnings per share and can provide an initial indication of how the market values its earnings. Still, the number needs context because different industries can have very different normal ranges. Looking at historical values, earnings growth, and business quality alongside the ratio can provide a more balanced perspective when evaluating stocks.
ReplyDelete