Define earning per share -eps, Financial Management

Assignment Help:

Earning per share

Earnings per share (EPS) are computed as profit attributable to equity divided by the number of shares in issue and ranking for dividends. EPS therefore represents what is available to be paid out as dividends. Clearly so if the number of shares in issue remains fixed the EPS will rise as the net profit attributable to equity increase.

The value of EPS is able to be calculated by dividing the share price by the P/E ratio. For Buntam this signifies EPS equals eight cents. In other prose the earnings per share is equal to the gross dividend payable. For Zellus the EPS is equivalent to 18 cents (270/15) which compares with a gross dividend of nine cents. On first sight thus it is tempting to view Zellus as a better investment because its EPS is higher. On the other side an investor has to pay 270 cents per share to get earning of 18 cents compared with 160 cents to get earning of eight cents. The EPS figure is of narrow value on its own it needs to be judged in conjunction with the share price and hence the P/E ratio.

 


Related Discussions:- Define earning per share -eps

Accounting principles board, Q. Accounting Principles Board ? Accountin...

Q. Accounting Principles Board ? Accounting Principles Board (APB) -senior technical committee of AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) that issued pronoun

What is corporate social responsibility, (a) The term "financial reporting"...

(a) The term "financial reporting" incorporates not only financial statements, but also includes other means of communicating financial and non-financial information. Financial rep

Explain about net working capital concept, Q. Explain about Net Working Cap...

Q. Explain about Net Working Capital Concept? Net Working Capital Concept: - Net working capital demotes to the difference among current assets and current liabilities. Current

Cost of capital, the nu-nu brothers inc. (NNBI) has the following capital s...

the nu-nu brothers inc. (NNBI) has the following capital structure,

Ways and means advances, WAYS AND MEANS ADVANCES (WMAs) WMA is not a pe...

WAYS AND MEANS ADVANCES (WMAs) WMA is not a permanent source of financing government deficit. But, this is likely to provide greater autonomy to the RBI in conducting monetary

Historical versus implied volatility, There are two ways to estimate ...

There are two ways to estimate yield volatility - historical volatility and implied volatility. Thus far we have discussed how to calculate volatility by estimati

Calculate the forward exchange rate, (a) A debt of $3600 with interest at 6...

(a) A debt of $3600 with interest at 6% compounded semiannually is to be amortized by semiannual payments of $900 each, the rst due in 6 months, together with a nal partial payme

Define the term- profit, Define the term- profit The term "profit" can ...

Define the term- profit The term "profit" can be used in two senses. As an owner-oriented concept it refers to amount and share of national income that is paid to owners of bus

Determine the economic viability, The purpose of this financial analysis is...

The purpose of this financial analysis is to determine the economic viability during the last five years of the Lance Company and to advise our client on whether the acquisition of

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd