Question

The formula of earning per share is ___________.

• A. $\frac{\text{Market price per equity share}}{\text{Number of shares}}$
• B. $\frac{\text{Gross profit}}{\text{Net sales}}\times 100$
• C. $\frac{\text{Operating costs}}{\text{Net sales}}\times 100$
• D. $\frac{\text{Net profit after tax and preference dividend}}{\text{Number of Equity shares}}$

Answer 1

Answer: (D)

$\frac{\text{Net profit after tax and preference dividend}}{\text{Number of Equity shares}}$

Earning per share is the portion of a company's profit allocated to each outstanding share of the common stock. It serves as an indicator of the company's profitability. It is calculated by dividing the market price per equity share by no. of shares.