From the course: Finance and Accounting Tips

Unlock the full course today

Join today to access over 22,600 courses taught by industry experts or purchase this course individually.

Earnings per share

Earnings per share

From the course: Finance and Accounting Tips

Start my 1-month free trial

Earnings per share

“

- On every income statement of a publicly traded company, you will see at the bottom the term earnings per share. Now, what does that number mean? - [Kay] Well, it means exactly what it says. It's the earnings per share. It's the earnings associated with an individual share of stock. Suppose a company reports earnings, or net income of one million dollars, and the company has a million shares of stock outstanding. - [Jim] Then the earnings per share of stock is $1.00 per share. That's the amount of a company's net income for the current period that is associated with each individual share of stock. - That means if I own a hundred shares of that company stock, then my share of that year's net income is $100. Now, that doesn't mean I'm going to receive a check for $100, it means that my claim on the company's income is that amount, $100. - Then, the corporation's board of directors, who are elected to represent the shareholders, they determine what to do with those earnings. Should we…

Contents