Introduction to EPS (Earnings Per Share) for Kids and Teens
This video explains the concept of Earnings Per Share in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about EPS, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What is EPS
- What exactly does Earnings Per Share mean
- Example of EPS
- Do you get an amount equal to EPS if you own a stock
Howdy Wall Street Willy.
In the newspaper, I read something about EPS. But…
What is EPS anyway?
EPS stands for Earnings Per Share.
EPS is the profit, or earnings, of the company for one year, divided by the number of stocks that the company has.
Earnings Per Share or EPS = Earnings of the Company for a Year / No. of Stocks of the Company
What exactly does Earnings Per Share mean?
As you know, the ownership in a company is defined by stocks.
EPS is the amount of the companyโs earnings assigned to each stock.
EPS Calculation: Could you give me an example?
If a company has 100 stocks, and has made a profit of $50 in the year, the EPS is $50 (its earnings), divided by 100 (the number of stocks it has).
So the EPS for that company will be 50 cents per share.
Earnings Per Share or EPS = $50 / 100 = $0.50
So if you own 5 stocks in the company, your share would be 5 times 50 cents, or $2.50.
Your Share =5 X $0.50 = $2.50
If I own one stock of the company, do I get an amount equal to the EPS every year?
No, EPS is what each share earns. However, it is not what you get as a stockholder.
You only get a portion of the EPS. The remaining is usually reinvested by the company to improve its operations – like for buildings and factories.
The portion you get as a stockholder is called a dividend.
Thank you very much for telling me about EPS, Wall Street Willy.
Youโre welcome, Sooper Cooper. Remember, finance is your friend!
Video Featured in the Below Financial Literacy Course for Kids & Teens
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Were does that 2.50 go that you got from the eps?
$2.50 for 5 shares, or $0.50 per share is the Earnings Per Share (EPS). A portion of it is distributed as dividend, and the remaining gets reinvested to expand the operations of the company.
Can you suggest an EPS Calculator for me? I want this, and your articles are very good and helpful thank you.
Hi Readul,
You don’t need a calculator for EPS: the EPS for publicly traded companies is readily available on financial websites like Yahoo Finance.