In this video, we will talk about Earnings Per Share, how it is calculated and how it is used in valuations to understand the potential of a business. Chapters 00:00 Introduction 01:01 What is Earnings Per Share? 02:23 EPS Calculation 03:40 EPS Calculation with Preferred Dividends 05:20 Trailing, Current and Forward EPS 06:16 Using EPS in Valuation PE Ratio What is EPS? EPS is defined as the ratio of net income to the total number of ordinary shares issued by the company. It is a number that helps investors figure out if the company is worth investing in or not. There are three types of EPS: Trailing EPS, Current EPS, and Forward EPS. EPS is used to calculate the PE ratio, which is the Stock Price/Earnings Per Share. There are two types of EPS: Basic and Diluted. Formula for EPS = (Net Income – Preferred Dividends) / Number of Common …
