How is EPS caliculated?

Earnings Per Share (EPS) is calculated by dividing a company's net income by the number of outstanding shares of its common stock. The formula is: EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares. This metric indicates how much profit is attributed to each share of stock, providing insight into a company's profitability on a per-share basis. EPS can be reported as basic EPS or diluted EPS, with diluted accounting for potential shares from convertible securities or stock options.