# Earning per Share Ratio : EPS

## Earning per Share Ratio : EPS

Earning per Share Ratio helps in determining the market price of equity shares of the company and in estimating the company’s capacity to pay dividend to its equity shareholder.

## How to calculate Earning per Share Ratio?

It is calculated as follows:

If there are both preference and equity share capitals, then out of net income first of all preference dividend should be deducted in order to find out the net income available for equity shareholders. A comparison of earning per share of the company with another company will also help in deciding whether the equity capital is being effectively used or not.

**NEXT – Market Test Ratios: P/E Ratio**

**Table of Contents 1) Market Test Ratios: Introduction 2) Market Test Ratios: Earning per Share Ratio 3) Market Test Ratios: P/E Ratio 4) Market Test Ratios: Payout Ratio 5) Market Test Ratios: Dividend Yield Ratio 6) Market Test Ratios: Price/Cash flow Ratio 7) Market Test Ratios: Price to book value Ratio 8) Market Test Ratios: Price/Sales Ratio 9) Market Test Ratios: Price/Earnings To Growth Ratio**