Define basic and diluted Earnings per share?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Define basic and diluted Earnings per share? 

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Basic Earnings per share is defined as the earning per share obtained from dividing the company’s net income available to ordinary equity shareholders by the total number of outstanding shares in the market.

Basic EPS= Net Income available to ordinary equity shareholders ÷Number of outstanding shares in the market

If the net income of the company is $ 1000 and number of outstanding shares of the company in the market is 100 then basic EPS = $ 1000  ÷ 100 = $ 10 per share.

 

 

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