EPS is simply profit amount divided by number of shares. Valuing a company as a whole is crucial during merger negotiations, buyouts or in similar arrangements – relatively rare events in the ongoing life of a company. For day-to-day valuations, many analysts prefer to focus on the value of single equity share. Here the earnings per share (EPS) computation helps to know how much of the company’s total earnings accrue to each share. A simple capital structure exists when a company has no convertibles, no options or no warrants outstanding. The simple formula used to compute earnings per share (EPS) is: To illustrate, IStaR Ltd. discloses the following information in the year 2012: January 1 December 31 Equity shares ( ` 1 face value) 160,000 shares issued and outstanding 160,000 200,000 shares issued and outstanding 200,000 Reserves 12,000,000 16,000,000 Retained earni...
New days, New ways... A platform featuring Courtroom drama, Opinions, and Commentary!