Earnings Per Share (EPS) Ratio

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on February 20, 2023

The earnings per share (EPS) ratio is effectively a restatement of the return on equity (ROE) ratio.

While the ROE ratio is calculated as a percentage, taking total net profit and total equity into consideration, the EPS ratio shows how much profit has been earned by each ordinary share (common share) in the year.


Formula For Earnings Per Share Ratio

Net profit attributable to ordinary (common) shares is arrived at by deducting corporation tax and preference dividend from the amount of net profit earned in any particular year.


The following information was extracted from the balance sheet of John Trading Concern at the end of a financial year:

  • Profit before tax: $480,000
  • Corporate tax: 50%
  • Ordinary share capital: 800,000 (80,000 ordinary shares at $10 each)

Required: Calculate John Trading Concern's earnings per share (EPS) ratio.


Earnings per share (EPS) ratio = $224,000*/80,000 shares

= 2.8

* Net profit attributable to ordinary shareholders = 480,000 - 240,000 - 16,000

= $224,000


The earnings per share (EPS) ratio is 2.8. This means that each ordinary share (common share) of the company earns $2.80 during the period.

Earnings Per Share (EPS) Ratio FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.