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What is EPS (Earnings Per Share)? A Simple Explanation for Kids, Teens and Beginners

What is EPS (Earnings Per Share)? Stock Market 101: Easy Peasy Finance for Kids and Beginners

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.

What is EPS or Earnings Per Share - A Simple Explanation for Kids Teens and Beginners
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

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Howdy Wall Street Willy.

In the newspaper, I read something about EPS. But…

What is EPS anyway?

EPS for Kids Teens and Beginners
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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 company’s earnings assigned to each stock.

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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).

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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?

Dividend vs Earnings Per Share for Kids Teens and Beginners
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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.

You’re welcome, Sooper Cooper. Remember, finance is your friend!


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Podcast: What is EPS (Earnings Per Share)?

Earnings Per Share or EPS
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4 thoughts on “What is EPS (Earnings Per Share)? A Simple Explanation for Kids, Teens and Beginners”

    • $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.

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