earnings per share

Public companies must report earnings per share (EPS) under the net income in their tax returns. This is required by Generally Accepted Accounting Practices (GAAP). The EPS gives investors a means of determining the amount the company recorded its share of investments. In other words, tells how investors net business income of EPS for each share they own. Is calculated by dividing net income by shareholders' equity. It is important that the shareholders of the company's net income must be reported on a per share, then you may want to compare with the price of the stock market.

Private companies are not required to report EPS, because shareholders are more focused on the entire net profit of the company.

listed companies actually report two EPS figures, unless what is known as a simple capital structure. The most listed companies, however, have a complex capital structure and to report two EPS figures. One is called Basic earnings per share, and the other is called the diluted earnings per share. Basic EPS is based on the number of shares of securities outstanding. Diluted earnings are actions that are based on, and the shares in the future in the form of stock options.

Of course, this is a complicated process. An accountant has to adjust the EPS formula a number of events or corporate changes. A company may issue additional shares during the year and the redemption of some of their own actions. a pool for each class of shares - or it may issue several classes of shares, net income in groups of two or more are shared. Merger, acquisition or sale, as the impact of the EPS formula.