Finance Formulas / July 13, 2018 / Briana Leonard
Earnings per share, the value of earnings per share of outstanding common stock, is a very important measure to assess a company's financial health. When reporting financial results, revenue and EPS are the two most commonly assessed metrics. EPS is reported on a company's income statement, and only public companies are required to report it. In their earnings reports, companies report both primary and diluted EPS, but the focus is generally on the more conservative diluted EPS measure. Dilutive EPS is considered a conservative metric because it indicates a worst-case scenario in terms of EPS.
The personal debtequity ratio is often used in financing, as when an individual or small business is applying for a loan. This form of DE essentially measures the dollar amount of debt an individual has for each dollar of equity they have. DE is very important to a lender when considering a candidate for a loan, as it can greatly contribute to the lender’s confidence (or lack thereof) in the candidate’s financial stability.
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