Usefulness of Earnings Per Share Free Essay Example, 1500 words

Earnings per share are useful for the shareholders because it tells the shareholder about the worthiness of his investment and the extent of profit each of his shares is generating. In a nutshell, it tells regarding the amount of profit earned per share. Earnings per share are useful for the shareholders because it tells the shareholder about the worthiness of his investment and the extent of profit each of his shares is generating. In a nutshell, it tells regarding the amount of profit earned per share. Difference b/w earnings and dividends. Earnings are the profits that a company generates during a year while the dividend is that part of the profit that the company distributes to its shareholders. The company may distribute all of the earnings in a particular year but cannot exceed that amount. Due to the uncertain economic conditions, the company has not declared the interim dividend for the year and therefore the board has not declared the final dividend as well which for the pr evious year was 0.675 pence per share. Ratios that are helpful from an investor s point of view can be that of Return on Capital ratio and Return on Assets ratio. We will write a custom essay sample on Usefulness of Earnings Per Share or any topic specifically for you Only $17.96 $11.86/page Companies from the manufacturing industry have income statement components such as the sales and cost of goods sold which a company from the service industry doesn t.