Retained Earnings per Share
Earnings per share of undistributed profits refers to the amount obtained by dividing the net profit not distributed to shareholders by the total number of company shares. This indicator can be used to evaluate the company's return to shareholders.
Definition: Earnings per share (EPS) of undistributed profits refers to the net profit not distributed to shareholders divided by the total number of shares of the company. This indicator can be used to evaluate the company's return to shareholders.
Origin: The concept of EPS of undistributed profits originates from financial statement analysis, particularly the shareholders' equity section. As financial management and investment analysis have evolved, this indicator has become an important tool for assessing a company's profitability and shareholder returns.
Categories and Characteristics: EPS of undistributed profits can be divided into two categories: 1. Historical EPS of undistributed profits, which refers to the cumulative undistributed profits since the company's inception; 2. Current EPS of undistributed profits, which refers to the undistributed profits for the current fiscal year. Historical EPS of undistributed profits reflects the company's long-term profitability and profit distribution policy, while current EPS of undistributed profits better reflects the company's current operating conditions.
Specific Cases: 1. A company had a net profit of 50 million yuan at the end of 2023 and a total of 10 million shares, resulting in an EPS of undistributed profits of 5 yuan. This means that each share corresponds to 5 yuan of undistributed profits, allowing investors to assess the company's profitability. 2. Another company had a net profit of 20 million yuan at the end of 2023 and a total of 5 million shares, resulting in an EPS of undistributed profits of 4 yuan. Although this company has a lower net profit, its higher EPS of undistributed profits indicates a smaller share capital and stronger profitability.
Common Questions: 1. Is a higher EPS of undistributed profits always better? Not necessarily. A high EPS of undistributed profits may indicate strong profitability, but it could also mean the company has not effectively reinvested its profits. 2. How is EPS of undistributed profits calculated? The formula is: EPS of undistributed profits = Undistributed profits / Total number of shares.
