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EPS Calculator

Find a company's earnings per share from net income, preferred dividends and the average share count, with an optional simplified diluted EPS.

Level: Grades 5–6

Printable worksheet

EPS Calculator

Know the answer you need? Pick an input to work backward.

Inputs

Profit for the period after all expenses and taxes. A loss is negative.

Dividends owed to preferred shareholders for the period. Leave blank if there are none.

The average number of common shares held by investors during the period.

Shares that options, warrants or convertibles would add. Enter to see diluted EPS.

Result

Basic EPS

$2.25 per share

$4,500,000.00 of earnings for common shareholders over 2,000,000 weighted shares gives basic EPS of $2.25.

Earnings available to common shareholders
$4,500,000.00

See the step-by-step solution ↓

Step-by-step solution

  1. Take off preferred dividends, because preferred shareholders are paid first. What's left belongs to common shareholders

    $5,000,000.00−$500,000.00=$4,500,000.00

  2. Divide those earnings by the average number of common shares to get each share's slice (basic EPS)

    $4,500,000.002,000,000=2.25

Test yourself

20 quick questions built from this calculator's formula: work out results, predict what happens when an input changes, and work backward from an answer. Every answer comes with the working.

Please note: Results are estimates for planning and comparison. Lenders, banks, and tax authorities may round differently or include fees not modeled here, so confirm figures with your provider before deciding.

What this calculator does

Find out how much of a company's profit belongs to each share of its common stock. That number is earnings per share, or EPS. It turns a huge profit figure into a per-share amount. You can compare it from year to year or set it against the share price. It also shows how fast profits grow for owners, not just for the business as a whole.

The calculator starts with net income, the profit left after all costs and taxes. It takes off any preferred dividends, money owed first to preferred shareholders. Then it divides what's left by the average number of common shares during the period (the weighted average). You can also enter the extra shares that options, warrants or convertible securities could create. Then it shows a simplified diluted EPS, the figure owners would see if all of those shares existed.

Where it's used

Why this math matters outside the classroom:

  • Earnings per share. Net income of $1,000,000 minus $100,000 of preferred dividends, spread over 450,000 shares, gives EPS of $2.00.
  • Price-to-earnings. Investors divide a $40 share price by $2.00 of EPS to get a price-to-earnings ratio of 20.
  • Dilution. Adding shares from options or convertible securities to the share count shows how diluted EPS compares with basic EPS.
  • Year-over-year change. Analysts compare EPS across years because it adjusts profit for changes in the number of shares.

How to use it

  1. Enter net income for the period. Use a negative number for a loss.
  2. Enter preferred dividends for the same period, or leave the field blank if there are none.
  3. Enter the weighted average number of common shares outstanding (held by investors).
  4. If you like, enter the extra shares from dilutive securities, then read basic and diluted EPS.

What the inputs mean

Net income
Profit for the period after all expenses and taxes. A loss is negative.
Preferred dividends
Preferred shareholders get paid before common shareholders, so their dividends aren't available to common owners. Use the dividends declared for the period. For cumulative preferred stock, where unpaid dividends carry over, use the amount owed.
Weighted average common shares
Companies can issue or buy back shares during the year. So EPS uses an average, weighted by how long each share was outstanding. Company reports usually state this figure directly.
Extra shares from dilutive securities (optional)
These are the extra common shares that would exist if in-the-money options and warrants (ones worth using) were exercised, and convertible securities were turned into shares. Enter a number that's already worked out; this calculator doesn't do that part.

Formula and method

earnings to common = net income − preferred dividends
basic EPS = earnings to common ÷ weighted average common shares
diluted EPS (simplified) = earnings to common ÷ (weighted shares + dilutive shares)

EPS measures the profit that belongs to common shareholders. That's why preferred dividends come off first. The earnings were made over the whole period, not on the last day. So dividing by a weighted average, not the year-end share count, matches the earnings with the shares that existed while they were made.

Diluted EPS asks what the per-share figure would be if every possible share were issued. The same earnings get spread over more shares, so diluted EPS is normally lower than basic EPS. Full accounting rules also adjust the earnings, for example by adding back interest on convertible bonds. They also leave out any security that would raise EPS (called anti-dilution). This simplified version doesn't adjust earnings. Its only anti-dilution rule is that in a loss, diluted EPS is shown equal to basic EPS.

Worked example

A company earns net income of $5,000,000, pays $500,000 in preferred dividends, and has 2,000,000 weighted average common shares. Stock options would add 250,000 shares.

  1. Earnings to common shareholders: $5,000,000 − $500,000 = $4,500,000.
  2. Basic EPS: $4,500,000 ÷ 2,000,000 = $2.25 per share.
  3. Diluted share count: 2,000,000 + 250,000 = 2,250,000.
  4. Diluted EPS: $4,500,000 ÷ 2,250,000 = $2.00 per share.

Result: Basic EPS is $2.25 and simplified diluted EPS is $2.00 per share.

Understanding the result

EPS on its own says little about whether a stock is cheap or expensive, because companies have very different numbers of shares. It gets useful when you track it over time. You can also divide the share price by it to get the price-to-earnings (P/E) ratio.

Rising EPS can come from higher profit, or from fewer shares after buybacks. Check both net income and the share count to see which is driving the change.

A wide gap between basic and diluted EPS is worth noticing. It means current owners could see their share of profit shrink a lot if options and convertibles are used.

Assumptions and limitations

  • All figures cover the same reporting period.
  • Preferred dividends are those for the period, and none are treated as optional.
  • Nothing is rounded along the way; EPS is shown to the cent.
  • Diluted EPS here only adds shares. Formal financial reporting also adjusts earnings for converted securities and tests each security for anti-dilution one by one. This calculator does neither.
  • One-off gains and losses can affect EPS. Many analysts also look at adjusted figures, which aren't modeled here.
  • This is an educational calculation, not investment advice.

Frequently asked questions

What is the difference between basic and diluted EPS?

Basic EPS uses only the common shares that actually exist. Diluted EPS also counts shares that options, warrants and convertible securities could create. So it shows the worst case, with earnings spread across every possible owner.

Why are preferred dividends subtracted?

Preferred shareholders have first claim on profit. Their dividends must be paid before anything is left for common shareholders. EPS measures what common shareholders get, so it leaves those dividends out.

Can EPS be negative?

Yes. If the company made a loss, or preferred dividends are bigger than net income, the earnings left for common shareholders are negative. Then EPS is negative too. In a loss year, diluted EPS is reported equal to basic EPS. That's because adding shares would make the loss per share look smaller. This calculator follows that rule.

Why use a weighted average share count?

A share issued halfway through the year only shared in half a year of earnings. Weighting each share by how long it was outstanding gives a fair number to divide by. Using the year-end count could make EPS look too high or too low after a big share issue or buyback.

How this calculator is checked

Method: Standard basic EPS definition: (net income − preferred dividends) ÷ weighted average common shares; diluted EPS simplified to an added share count. The calculation is covered by automated tests with known reference values and edge cases. Last updated 2026-10-18. Found a problem? Tell us.

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