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Ratios Made Simple: A beginner's guide to the key financial ratios by Robert Leach

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1. Profitability Ratios

1.1: Earnings Per Share (EPS)

Basic information and calculating the ratio

Definition

Earnings per share (EPS) = Net profit ÷ number of issued shares

Net profit is the company’s profit after payments of interest, tax and minority interests, but before payment of dividends to ordinary shareholders. In other words, the figure used for net profit is what is available to the holders of the company’s ordinary shares from that year’s profits.

If the company has made a loss during the accounting period, EPS is shown as a negative figure.

Interest includes all forms of payment on loans, preference shares and all other forms of borrowing or debt equity.

Tax means corporation tax that is or will be payable by the ...

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