Earnings per equity share:

It means profit divided by number of equity shares.

Question 1

Profit Earned                  4000000
Share capital                    100000
(10000 shares @10 each)

Calculate EPS

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Question 2

Profit Earned             4000000
Share capital               140000
Co had 10000 share of beginning of the year it issued 4000 share on 1 july

Calculate EPS

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Question 3

Profit Earned                         4000000
Share capital                           100000
Co had 10000 shares during the year. it had received 20000 share application money.Next year 2000 shares will be issued @10 each

Calculate EPS

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Difference between

Basic EPS Diluted EPS
We take existing number of shares We take existing + future  shares for which liability has arisen.
It is usually more or equal to Diluted It is less or equal to Diluted because of higher denominator 
  1. Accounts and Finance
  2. Step 7 Ratio Analysis
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .