EPS Formula: How to Calculate Earnings Per Share and Why It Matters
Warren Team
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Key terms
- Earnings Per Share (EPS)A company's net profit divided by the number of outstanding shares. Used to measure profitability and calculate the P/E ratio. Higher EPS generally indicates better profitability.
- Price-to-Earnings Ratio (P/E Ratio)Stock price divided by earnings per share. Measures how much investors pay for each dollar of earnings. High P/E suggests growth expectations; low P/E may indicate value.
- Room and BoardThe combined cost of housing and meal plans at a college or university, which is a significant portion of the overall cost of attendance. Room and board costs vary depending on whether you live on campus, off campus, or at home, and the type of meal plan you select. Many colleges require first-year students to live on campus and purchase a meal plan.
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