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14.5 Discuss the Applicability of Earnings per Share as a Method to Measure Performance

Earnings per Share (EPS)​

EPS Formula: EPS = Net Income ÷ Weighted Average Shares Outstanding

Purpose:

  • Measure profitability per share
  • Compare across companies
  • Important for investors

Example:

  • Net Income: €50,000
  • Shares Outstanding: 10,000
  • EPS: €50,000 ÷ 10,000 = €5.00 per share

Luxembourg Considerations​

EPS in Luxembourg:

  • Required for public companies
  • Optional for private companies
  • Useful for performance measurement
  • Can be calculated for any corporation

Luxembourg Compliance Note​

EPS in Luxembourg:

  • Required disclosure for some companies
  • Must be calculated correctly
  • Must be disclosed if material
  • Useful for analysis

Think It Through​

Why is earnings per share useful? How does it help investors evaluate a company?