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

Finance for managers, Before tax cost of debt and after tax cost of debt; ...

Before tax cost of debt and after tax cost of debt; Personal finance problem. David Abbot is interested in purchasing a bond issued by Sony. He has obtained the following inform

Walters model, A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U a...

A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U and fixed cost amount to Rs.1,70,000 it finances all its assets by equity funds. It pays 40% tax on its income. Z Ltd is

What is financial risk, What is Financial risk Financial risk is affe...

What is Financial risk Financial risk is affected by mixture of long-term financing or capital structure, of firm. Firms with high levels of long-term debt in proportion to t

Operating cycle, Explain the operating cycle of a vegetable growing busines...

Explain the operating cycle of a vegetable growing business

London stock exchange, London Stock Exchange (LSE) The origin of the Lo...

London Stock Exchange (LSE) The origin of the London Stock Exchange goes back to the coffee houses of 17th century. London, where people willing to invest or raise money, bough

What is the meaning of over-capitalisation, What is the meaning of Over-cap...

What is the meaning of Over-capitalisation It is the opposite of over trading. It means a company has a large volume of inventories, trade receivables and cash balances though

Help ASAP, If firm A has a higher debt-to-equity ratio than firm B then tha...

If firm A has a higher debt-to-equity ratio than firm B then that means what

What difference does it make ordinary annuities, If you are doing PVA and F...

If you are doing PVA and FVA problems, what difference does it make if the annuities are "ordinary annuities" or "annuities due"? In PVA or a FVA of annuity due trouble, annuit

Foreign exchange rates, Foreign Exchange Rates The proportional va...

Foreign Exchange Rates The proportional value of one currency to other, used to exchange currency from one denomination to another.  For example, one British pound is wort

Financial evaluation and decision making, Financial Evaluation and Decision...

Financial Evaluation and Decision Making: The final major element of financial management is the evaluation of the information provided through the accounting and budget proces

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