earnings per share (EPS) business definition

An earnings measure calculated by subtracting the dividends paid to holders of preferred stock from the net income for a period and dividing that result by the average number of common shares outstanding during that period. EPS is the amount of reported income, on a per-share basis, that a firm has available to pay dividends to common stockholders or to reinvest in itself. As with other financial measures, EPS can vary with differing accounting techniques; therefore, reported EPS may give a very misleading signal as to how the firm is really doing. Also called income per share, net income per share. See also basic earnings per share, diluted earnings per share.