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What is Earning per share and diluted earning per share ? How do we calculate the same ? Is it necessary to disclose them in Annual Reports ?

Financial Reporting
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Question added by C S Raghunandan Chikkaballapur Rao , Freelancer : , Presently Working for : Brindavan Agencies,Kreations and Sreevamsa sales Organisation.
Date Posted: 2015/04/23
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Shahbaz Hayder
by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Earnings per share (EPS) is the monetary value of earnings per outstanding share of common stock for a company.

FORMULA

 

Basic EPS= (Net income - Preferred dividends) / Weighted average number of common stock outstanding

 

Diluted earnings per share (diluted EPS) is a company's earnings per share calculated using fully diluted shares outstanding.

 

FORMULA

 

Diluted EPS = (Net income- Preferred dividends + Income adjustments due to dilutive financial instruments) / (Weighted average number of common shares outstanding+Newly issuable shares due to dilutive financial instruments)

 

Yes it is necessary to disclose EPS and Diluted EPS in Annual Report.

 

 

 

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