Ever wondered how to measure a company’s profitability? 🤩
Well, there’s actually a metric to help us figure that out!
💡EPS = how much money a company makes for each share of its stock. 🤑
EPS is calculated by dividing a company's net income by the number of shares of its stock outstanding. 💰
So, if company A makes $100 million/year and it has 10,000 stocks, its EPS is 10! 🤔
This number is used by investors and analysts to evaluate a company's performance and make decisions about investing 🤔
There are many different ways investors can use EPS, but here are 5 to start us off 👉
1️⃣ EPS helps companies compare their performance to other companies in the same industry. 💰
2️⃣ EPS is also used to calculate other financial metrics, such as the price-to-earnings ratio. 🤔
💡Price-to-earnings ratio = how expensive a stock is compared to its earnings.
3️⃣ EPS can be affected by a variety of factors, including changes in a company's operating costs, taxes, and capital structure. 📊
4️⃣ EPS can also be used to compare a company's performance over time. 📈
5️⃣ EPS can be used to measure the return a company is earning on its investments. 🤑
So, now you know how to determine how profitable a company is! 🥳
