Advanced English Dialogue for Business – Basic earnings per share

Listen to a Business English Dialogue About Basic earnings per share

Naomi: Hi Elizabeth, do you know what basic earnings per share is?

Elizabeth: No, I don’t. What does it measure?

Naomi: Basic earnings per share is a financial metric that calculates a company’s net income available to common shareholders divided by the average number of common shares outstanding during a specific period.

Elizabeth: Oh, I see. So, it tells us how much profit each share of common stock represents?

Naomi: Exactly! It’s a measure of a company’s profitability on a per-share basis.

Elizabeth: Are there any factors that can affect basic earnings per share?

Naomi: Yes, factors like changes in net income, the number of outstanding shares, or any dilution from convertible securities can impact basic earnings per share.

Elizabeth: How do investors use basic earnings per share when evaluating a company?

Naomi: Investors often use it to assess a company’s profitability and compare it to other companies in the same industry or to historical performance.

Elizabeth: Can basic earnings per share be negative?

Naomi: Yes, if a company reports a net loss, its basic earnings per share can be negative, indicating a loss per share for common shareholders.

Elizabeth: Thanks for explaining, Naomi. Basic earnings per share seems like a straightforward measure of a company’s profitability.

Naomi: You’re welcome, Elizabeth. It’s a fundamental metric that provides valuable insights into a company’s financial performance.