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📈Profitability Ratios

Earnings Per Share (EPS)

(Net Income - Preferred Dividends) ÷ Weighted-Average Common Shares = EPS

What It Means

Profit allocated to each share of common stock.

Example

Net Income:$100,000
Preferred Dividends:$10,000
Shares Outstanding:45,000

($100,000 - $10,000) ÷ 45,000

EPS = $2.00

Related Formulas

Profit Margin

Net Income ÷ Net Sales × 100 = Profit Margin %

Gross Margin Ratio

Gross Profit ÷ Net Sales × 100 = Gross Margin %

Return on Assets (ROA)

Net Income ÷ Average Total Assets × 100 = ROA %

Return on Equity (ROE)

Net Income ÷ Average Stockholders' Equity × 100 = ROE %

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