Business Glossary

profit accruing to stockholders for each share held. In a simple capital structure , basic earnings per share equals:

Net Income – Preferred Dividend Weighted Average Common Stock Outstanding

In a complex capital structure, basic earnings per share and diluted earnings per share are presented.

portion of a company's profit allocated to each outstanding share of common stock. Companies usually report the weighted average of the number of shares outstanding over the reporting period. Earnings per share, a widely used measure of profitability, is usually reported in two ways: basic earnings per share and diluted earnings per share, which includes any convertibles and warrants outstanding.

portion of a company's profit allocated to each outstanding share of common stock. For instance, a corporation that earned $10 million last year and has 10 million shares outstanding would report earnings of $1 per share. Current and future earnings per share are key statistics in evaluating a stock's outlook.

See also Price-Earnings (P/E) Ratio