Earnings Per Share (EPS) is a key financial ratio that indicates how much profit a company earns for each share of its equity stock. In simple terms, EPS helps investors, business owners, and analysts understand the profitability of a company on a per-share basis. It is calculated by dividing the net profit (after tax and preference dividend) by the total number of outstanding equity shares.
In the Indian context, EPS is especially important for companies listed on stock exchanges like the NSE or BSE, as it is a required disclosure under SEBI regulations. However, even unlisted private companies often track Earnings Per Share (EPS) to assess performance, secure funding, or prepare for future public listing.
For small businesses and startups, understanding EPS can be useful during equity valuation, investor presentations, or when applying for loans and funding. It gives a clear snapshot of how much value is being generated for each share owned by investors, which is a critical metric for financial transparency and trust.
EPS is also commonly used in regulatory filings, annual financial statements, and internal decision-making to compare performance across financial years or against competitors.
Maintaining a healthy Earnings Per Share (EPS) is considered a strong sign of business profitability and can improve a company's credibility among stakeholders.