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‘Earnings per share’ is essentially a ratio used in the financial analysis of set of
financial statements. This ratio is, however, so useful and popular that the standard
IAS 33, had to be developed to control the method of calculation there of. This
standard sets out how to calculate:
1. The numerator: earnings ; and
2. The denominator : The number of shares
EARNING PER SHARE
In summary, there are two main types of Earnings per share:
• Basic earning per share
• Diluted earning per share
TYPES OF EPS
• Basic earning per share:-
Basic earning per share is calculated by dividing earnings attributable to the ordinary
shareholders by the weighted average number of ordinary shares in issue during the
year.
• Diluted earning per share:-
Dilution means to make thinner or less concentrated with respect to earning per share,
dilution would to occur if the same earning have to be shared amongst more
shareholder than are currently in existence. Many entities at year have potential shares
outstanding, which if converted into shares, would diluted the earning per share.
DEFINITION AND CALCULATION METHOD

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earnig per share.pptx

  • 1. ‘Earnings per share’ is essentially a ratio used in the financial analysis of set of financial statements. This ratio is, however, so useful and popular that the standard IAS 33, had to be developed to control the method of calculation there of. This standard sets out how to calculate: 1. The numerator: earnings ; and 2. The denominator : The number of shares EARNING PER SHARE
  • 2. In summary, there are two main types of Earnings per share: • Basic earning per share • Diluted earning per share TYPES OF EPS
  • 3. • Basic earning per share:- Basic earning per share is calculated by dividing earnings attributable to the ordinary shareholders by the weighted average number of ordinary shares in issue during the year. • Diluted earning per share:- Dilution means to make thinner or less concentrated with respect to earning per share, dilution would to occur if the same earning have to be shared amongst more shareholder than are currently in existence. Many entities at year have potential shares outstanding, which if converted into shares, would diluted the earning per share. DEFINITION AND CALCULATION METHOD