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Earnings Per Share
June 07 , 2012

Earnings Per Share (EPS) is the net profit each share of the company has earned over the year. To calculate this, the companys Net Profit needs to be divided by the number of shares outstanding. This EPS number, taken along with the prevailing share price, gives a very important number called the PE ratio, which is used in several analyses on the stock. A negative EPS indicates a loss making company.

EPS = Net Profit / Number of shares outstanding

As an average investor, you need not bother yourself with this number and can leave it to the analysts. A good grasp of the more important PE ratio, however, helps.

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