Five (5) Advantages of earning per share (EPS) reporting

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company’s profitability.

The following are some of the advantages of earning per share:

  • It is the medium through which the EPS of different entities are compared; 
  • It can be used to evaluate and compare the EPS of the same entity in different years. Thus, it is useful in trend analysis of entity’s EPS.
  • It measures performance from perspective of investors and potential investors.
  • It points out earnings distributable to ordinary shareholders. 
  • It is the measure of return to entity’s shareholders

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