Earnings Per Share (EPS), Basic
What is basic EPS?
Earnings per Share is the amount of earnings per share of issued, ordinary shares. When companies report financial results, earnings per share is one of the most commonly measured metrics.
It is worth noting that basic EPS is an approximate measure of a company's earnings per ordinary share. This metric is suitable for companies with a simple capital structure. Basic Earnings per Share do not take into account the dilution impact of convertible securities, which is important when analyzing the profits of companies with more complex capital structures.
How is Basic EPS calculated?
Basic EPS is calculated based on the average number of ordinary shares for the last 12 months. This applies to American companies. For non-American companies, the average number of ordinary shares for the previous fiscal year is used instead.