FREarningsPerCommonShare (NetProfit, PreferredDividend, NumOfCommonShare)

Basic and Crystal syntax.

Format

FREarningsPerCommonShare(NetProfit, PreferredDividend, NumOfCommonShare)

Arguments
Action

FREarningsPerCommonShare returns the ratio between net profit distributable to common shareholders (NetProfit-PreferredDividend) and NumOfCommonShare (for example, EarningPerCommonShare = (NetProfit - PreferredDividend) / NumOfCommonShare).

Typical uses

This ratio is used to calculate how much profit that a common share is entitled to. This ratio is used side by side with dividend per common share to determine the dividend pay out ratio. Some analysts may want to perform a fully diluted earnings per share. In this case, they have to take into account of all the common shares that will be converted from all the convertible preferred shares.

Examples

The following examples are applicable to both Basic and Crystal syntax:

FREarningsPerCommonShare(550000, 50000, 100000)

Returns 5.

FREarningsPerCommonShare(450000, 10000, 2000000)

Returns 0.22.

Note:    

Comment

FREarningsPerCommonShare is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.

Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.



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