Earning Per Share

[laroche]

The EPS is calculated as the fraction of (the Earning or Profit After Tax divided by Total number of Ordinary Shares).

This implies to me that if the denominator (i.e. Total number of Ordinary Shares) increases, then it's going to decrease the EPS.

My question now is that when does the Total number of Ordinary Shares increases? Is it when more people buy the shares of such equity or when more people sell-off the shares of such equity.

Hope I make myself clear enough. Many thanks in advance.

[Murphy]

Originally Posted by laroche

The EPS is calculated as the fraction of (the Earning or Profit After Tax divided by Total number of Ordinary Shares).

This implies to me that if the denominator (i.e. Total number of Ordinary Shares) increases, then it's going to decrease the EPS.

My question now is that when does the Total number of Ordinary Shares increases? Is it when more people buy the shares of such equity or when more people sell-off the shares of such equity.

Hope I make myself clear enough. Many thanks in advance.

The number of share of any company increases when the company issues NEW ONES like the case of Public offer, rights issue or private placement to a core investor or the company gives bonus issues to existing shareholders. In Investment parlance they call it DILUTION of shares.
Trading of shares on the stock exchange does not mean that the number of shares of a company increases, it is the existing shares that are previously issued that are being traded.
Offer for sale of existing share by a majority shareholder (just like DAAR comminucations offer) is not a new issue, it is existing issues that are being sold to the public.
Cheers

[nwoyearoh]

Originally Posted by laroche

The EPS is calculated as the fraction of (the Earning or Profit After Tax divided by Total number of Ordinary Shares).

This implies to me that if the denominator (i.e. Total number of Ordinary Shares) increases, then it's going to decrease the EPS.

My question now is that when does the Total number of Ordinary Shares increases? Is it when more people buy the shares of such equity or when more people sell-off the shares of such equity.

Hope I make myself clear enough. Many thanks in advance.

In addition, could also increase when company declares bonus to (existing) shareholders.