Easing into Earnings per Share
In This Chapter
Understanding the key calculations
Rifling through rights issues
Dishing out bonus issues
Dealing with disclosures
Earnings per share, the amount of a company’s profit that belongs to a single share, is probably one of the most important ratios that’s widely used by financial analysts, investors and other users of the financial statements to get an idea as to the profitability of a company, as well as to value a company’s shares. Earnings per share is such an important accounting ratio that an entire accounting standard exists on the very subject – IAS 33 Earnings per Share.
The reality is that in the world of IFRS, the earnings per share ratio is only really applicable to those companies that trade their shares on a stock market (for example, the London Stock Exchange) because such markets place a huge amount of emphasis on the earnings per share ratio.
Calculating Basic Earnings per Share
The way to calculate ...