This key number expresses the earnings available to shareholders in per share terms – hence the term earning per share.

So if a firm makes profits after tax of say £100m and has 50m shares in issue, EPS is £100m/50m or £2. The higher this number the better from a shareholder’s perspective although the overall trend is also important over say a five year period. EPS forms a key part of a standard price to earnings (P/E) ratio.