Earning per share (EPS) (36)
- Company profitability performance measure for public-traded firms
- Simple capital structure (37)
- Contain no potentially dilutive securities
- Only contain common stock, non-convertible debt, con-convertible preferred stock
- Complex capital structure (38)
- Contain potentially dilutive securities such as options, warrants, convertible securities
- Must report both basic and diluted EPS
Basic EPS
- Does not consider the effects of any dilutive securities in computation of EPS
- EPS refers to earnings available to common shareholders
- Weighted average number of common shares:
- Share outstanding weighted by portion of the year they were outstanding
- Effect of stock dividends and stock splits
- Stock dividend (39)
- Distribution of additional shares to each shareholder in amount proportional to current number of share
- Stock split (40)
- Division of each old share into specific number of new shares