Define the term- earnings per share, Financial Management

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Define the term- Earnings per share (EPS)

EPS = Profit available to ordinary shareholders (PAT) / Weighted average number of shares in issue(p per share)

This ratio illustrates profitability of every share, i.e. amount of potential dividend available per share. EPS is a very significant ratio and is published in the annual accounts of companies (IAS 33).

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