How this calculator works
Allocate earnings remaining after preferred dividends across the weighted average common shares for the reporting period. This is basic EPS. Changes in shares during the year need time weighting; it is not enough to use only the closing share count. Losses remain negative.
Formula
Basic EPS = (net income - preferred dividends) / weighted average common shares. Rearrange this identity to solve for any one input.
Worked example
Income of $1,000,000 less $100,000 preferred dividends, over 300,000 shares, gives $3 EPS. A $200,000 loss with no preferred dividends and 100,000 shares gives -$2 EPS.
Advertisement
Frequently asked questions
Which dividends are subtracted?
Preferred dividends, not common dividends. Common distributions do not reduce the earnings allocated to common shareholders.
How is diluted EPS different?
Diluted EPS adjusts the earnings numerator and share count for dilutive potential common shares. Use published diluted figures for complex capital structures.
Can EPS be negative?
Yes. Negative earnings available to common shareholders produce a loss per share.