Earnings Per Share: Basic - Lesson 1 - YouTube

all right let's move on to another fun and exciting area welcome welcome to

white earnings per share

ETPs now what is earnings per share earnings per share as 10 most talked

about numbers in the financial statements creditors want to know about

investors want to know about it basically they're saying hey I need this

information

it is information is required to disclose on the face

the income statement for publicly held companies will expand on that in a

minute

but what is earnings per share a lot of people think earnings per share is how

much money I'm gonna get it the dividend

no its calculated the same way each year so you can compare one year to the next

year to the next year

so we have to calculate in a way that is consistent from year to year to year

what errands per share means it is theoretically

how much each shareholder would get if

the company paid out all a bit income in the form

other David it's not how much you're really gonna get but

if the company were to pay out all a bit income at the district all its income

how much would you as a common shareholder

burned per share that's why it's called earnings per share

that would be earnings per share of common stock now

where we disclose it says it is required to present information

four basic and diluted on the face up the income statement

now remember my income statement we're gonna cover this in detail in another

section

I like to go surfing on time I

OC operating non-operating taxes gives you

income from continuing operations cuz you expect that to happen every year

then you got discontinued or disposal

and extraordinary and then you have net income you are required to show it on

the face if the income statement

income from continuing and net income you also need to

show either on the face or in the footnotes for the D in the e

so these to your gonna show in the face or the footnotes

but on the face you have to show these two you don't have to show

earnings per share for comprehensive income you don't have to show it for

earnings proper cash flows and blah blah blah

but you do need to show it for this so that's where you gonna show what

on the face

to the income statement and we're gonna show it for two things the two terms are

called

basic and diluted basic and diluted

basic is known as yours simple capital structure it's called basic

or sample it basically says there's no pro 10 Julie dilutive securities

there's real basic there's nothing that can be converted into common stock

what kinda things could be converted to common stock options rights and warrants

get stock option converted to common stock

convertible per for convertible bonds

those could be converted into common stock those are

potentially dilutive so simple said those are sampled they're not there

complex are diluted

is called a complex right this is simple

right kinda like my ex girlfriend I

stempel this is complex kinda like my wife

Anna very complex now what does that mean it means that

this says there are potentially dilutive securities

and missus anyone who could convert

so the assumption here than one who could convert does sell

it doesn't even matter if they were really do can burqas this is a

theoretical number only

another word could they convert yes they could doesn't matter if they did

could a yes and what everyone's earnings per share go down if they did

yes that means that dilutive it dilutes earnings per share

and other words bernie's per share to get less and less and less

that mean someone's giving up less than getting more everybody gets less

that's called diluting earnings per share so when we talk about is it

diluted that means it's

everyone like you're making orange juice in the morning right I grew up

and we have to buy frozen orange juice the open up from the container

if you add too much water it gets to week

right to dilute it so that's what we mean by dilutive

is a diluting is a breaking down so we're talking about the different

capital structures

we have a basic capital structure that consists of common stock and nothing

else potentially dilutive

we have a complex capital structure called diluted

and that is common stock in anything that could potentially be

converted in to common stock so that's what we're looking at

as far as diluted are fully diluted