It's important to the
stockholders who want the net income of the business to be communicated to them
on a per share basis so they can compare it with the market price of their
shares.
A business might issue additional stock shares during the year and buy back some of its own shares.
The EPS gives investors a means of determining the amount the business earned on its stock share investments. In other words, EPS tells investors how much net income the business earned for each stock share they own. It's important to the stockholders who want the net income of the business to be communicated to them on a per share basis so they can compare it with the market price of their shares.
A business might issue additional stock shares during the year and buy back some of its own shares. Or it might issue several classes of stock, which will cause net income to be divided into two or more pools - one pool for each class of stock.
Because stockholders focus more on the business's total net income, private businesses don't have to report EPS.
Basic EPS is based on the number of stock shares that are outstanding. Diluted earnings are based on shares that are outstanding and shares that may be issued in the future in the form of stock options.
Diluted earnings are based on shares that are outstanding and shares that may be issued in the future in the form of stock options.
A business might issue additional stock shares during the year and buy back some of its own shares.
The EPS gives investors a means of determining the amount the business earned on its stock share investments. In other words, EPS tells investors how much net income the business earned for each stock share they own. It's important to the stockholders who want the net income of the business to be communicated to them on a per share basis so they can compare it with the market price of their shares.
A business might issue additional stock shares during the year and buy back some of its own shares. Or it might issue several classes of stock, which will cause net income to be divided into two or more pools - one pool for each class of stock.
Because stockholders focus more on the business's total net income, private businesses don't have to report EPS.
Basic EPS is based on the number of stock shares that are outstanding. Diluted earnings are based on shares that are outstanding and shares that may be issued in the future in the form of stock options.
Diluted earnings are based on shares that are outstanding and shares that may be issued in the future in the form of stock options.
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