How do we methodically calculate a firms Earnings per share and Dividend per share from given financial statements.
Calculation of Earning per share from financial statements:
Step 1: calculate total profit after tax.
Step 2: Figure out the total number of shares outstanding.
Step 3: divide total profit after tax by total number of share outstanding
Step 4: Hence, we will get Earning per share.
Calculation of Dividend per share from the financial statements:
Step 1: Calculate Earning per share as explained above.
Step 2: Determine the payout ratio of the company.
Step 3: Multiply Earning per share with payout ratio.
Step 4: Hence , we will get dividend per share.
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