Adjusted Earnings Per Share

Описание: Adjusted Earnings Per Share. How do you calculate adjusted EPS, and what are some examples of adjusted EPS from real-life companies?

To understand Adjusted Earnings Per Share, let’s first review the definition of “regular” Earnings Per Share. EPS is simply Net Income divided by the number of outstanding shares.

Examples of companies using some form of Adjusted Earnings Per Share. I have four examples that I want to share in this video: American Express which uses Adjusted EPS, Boeing which uses Core EPS, Intel which uses Non-GAAP EPS, and Procter & Gamble which uses Core EPS. Guess what, the way Boeing defines Core EPS is different from the way Procter & Gamble defines Core EPS. If you review the annual reports of other companies, you might also come across terms such as Operational EPS. All of these are some form of Adjusted EPS: you take GAAP EPS and adjust it for certain items to get to Adjusted EPS. What the items are that are adjusted for, is different by company! Let’s go through the examples to illustrate this.

So what is important to understand about Adjusted Earnings Per Share? Adjusted EPS is a term that has many variations, it can for example also be called Core EPS, non-GAAP EPS, or Operational EPS. The formula for Adjusted EPS is: you take GAAP EPS and adjust it for certain items to get to Adjusted EPS. The adjustment can relate to one-time tax charges, pension gains or losses, amortization of intangibles, restructuring, and many other items. Adjusted EPS can be higher or lower than GAAP EPS, but as we saw in the examples in this video it is very often higher.

Philip de Vroe (The Finance Storyteller) aims to make strategy, #finance and leadership enjoyable and easier to understand. Learn the #business and accounting vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investing decisions. Philip delivers #financetraining in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!