What is Earnings Per Share (EPS)?
Basic earnings per share (EPS) is a profitability metric that shows how much of a company’s net profit is attributable to each outstanding common share. It is calculated by dividing net income available to common shareholders by the weighted-average number of ordinary shares outstanding during the period.
How It Works
- Start with net profit attributable to ordinary shareholders (after preferred dividends).
- Calculate the weighted-average number of ordinary shares outstanding during the period.
- Divide net profit by the weighted-average shares to get basic EPS.
- Present basic and diluted EPS on the face of the income statement under IAS 33.
Saudi Context
All Saudi companies listed on Tadawul publish basic and diluted EPS in their quarterly and annual financial statements. The Capital Market Authority and stock exchange require EPS disclosure for IPO prospectuses, rights issues, and any material corporate actions.
Example
A Saudi listed company reports SAR 80 million net profit and has 20 million weighted-average shares outstanding. Basic EPS = SAR 80M / 20M = SAR 4.00 per share.