BU397 Lecture Notes - Lecture 8: Financial Statement, Income Statement, Issued Shares
Document Summary
Objective of eps: earnings per share tells common shareholders how much of the available income is associated with the shares they own (their share of the pie, provides insight to common shareholders about: Impact of other financial instruments on their potential earnings (diluted eps) Aspe does not calculate eps they believe eps figure wouldn"t be relevant to them. Price/eps = how many times the cost you"re paying for the share. Value investors value oriented shares - those shares that have a low multiplier if they invest in those companies, they"re acquiring the company for a lot cheaper. Eps = income available to common shareholders / weighted average # of common shares. This is the basic eps calculation most public accountable entity will show this on the income statement, and even the notes to the financial statement. No income available to common shareholders until preferred shareholders are paid: depends on cumulative or non-cumulative will impact eps.
