How to Compute Earnings per Share Using Financial Statements
- 1). Multiply the preferred shares outstanding by the dividends paid per preferred share to calculate the total preferred share dividends. For example, if the company has 30,000 preferred shares outstanding and pays a preferred dividend of $3.40, the total preferred share dividends equal $102,000.
- 2). Subtract the preferred share dividends from the company's net profits for the year to find the earnings available to common shareholders. In this example, if the company had $904,000 in total profits, subtract $102,000 from $904,000 to find the company has $802,000 in earnings available to common shareholders.
- 3). Divide the earnings available to common shareholders by the number of common shares outstanding to find the earnings per share. Completing this example, if the company has 650,000 shares outstanding, divide $802,00 by 650,000 to get $1.23 earnings per share.
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