Final answer:
Earnings Per Share (EPS) is found on the income statement and is calculated by subtracting preferred dividends from net income and then dividing this figure by the number of common shares outstanding.
Step-by-step explanation:
Earnings Per Share (EPS) is a key financial metric that appears on the income statement. It represents the portion of a company's profit that is allocated to each outstanding share of common stock. Calculating EPS involves taking the net income (or profit) of a company and deducting any preferred dividends before dividing the value by the number of common shares outstanding. The formula for EPS is succinctly put as Net Income less Preferred Dividends divided by the number of Common Shares Outstanding. The result is an indication of the company's profitability on a per-share basis, enabling investors to compare performance across companies with different numbers of shares.
For example, if a company like the one mentioned has a Present Discount Value (PDV) of total profits of 51.3 million and 200 shares, you would divide 51.3 million by 200 to get an EPS of 0.2565 million, or $256,500 per share. However, it is important to note that in practice, the EPS figure is more nuanced as expected profits are estimates and the chosen interest rate can significantly affect present value calculations.