Earnings per share (EPS)

Earnings per share (EPS) is a financial metric that represents the portion of a company's profit allocated to each outstanding share of its common stock. In other words, it is the amount of earnings generated by the company for each share of its outstanding stock.

To calculate EPS, we need to divide the net profit earned by the company by the total number of outstanding shares of the company. For example, if a company has a net profit of INR 100 crore and 10 crore outstanding shares, then its EPS would be INR 10.

EPS is an important metric that investors can use to evaluate a company's profitability and growth potential. A higher EPS indicates that the company is generating more profits per share, which could attract more investors and result in an increase in the company's share price.

Investors can use EPS to compare the performance of different companies within the same industry or sector. They can also use EPS to evaluate the company's earnings growth over time. If a company has a consistently increasing EPS over the years, it indicates that the company is growing and generating more profits.

Investors should not make investment decisions based solely on EPS. It is important to consider other financial metrics such as price-to-earnings ratio (P/E ratio), dividend yield, and return on equity (ROE) to get a complete picture of the company's financial health and future growth prospects.