Earnings per Share (EPS)
Financial Dictionary — Financial Accounting
Definition
Earnings per share measures the amount of profit attributable to each ordinary share. It is calculated by dividing profit attributable to ordinary shareholders by the weighted average number of shares.
Use cases, Example & Why it matters
Use cases
- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.
- Used when preparing trial balances and reconciling accounts.
Example
- Example: Accountants use **Earnings per Share (EPS)** when recording transactions and preparing the trial balance.
Why it matters
- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.