A figure computing the amount earned by a person (or a business) as if the earnings took place over the course of a year. The process of annualization is used to make easier comparisons of financial events that take place over irregular periods of time (See: Annualize).
Annualization comes up a lot in calculating income. Salaried employees often get their wages reported as yearly amounts. For instance, a bank clerk's pay might get advertised as $45,000 a year. You'll rarely see a job posting giving that figure as $3,750 a month or as $173.08 a day. This allows for better comparison of items that might have complicating factors.
For instance, one job might have a lower hourly wage, but significant opportunity for overtime. Meanwhile, a second job might have an irregular schedule, say alternating shifts of three days one week and four days in the following week. Comparing the earnings from the two positions might be difficult on a weekly or monthly basis, but becomes easier when the figures are annualized.
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Finance: What is Earnings Per Share (EPS...33 Views
finance a la shmoop what is earnings per share or EPS? okay you know the lemonade
stand the one with 20 grand in sales and 16 grand in gross profits and yeah will [Balance sheet for Lemonade Stands R Us appears]
spare you the gross jokes you know the customer asks lemonade.. what the fly
was doing in his lemonade and yes of course she said the backstroke what else
would you expect from the people at Schmo really?
so after gross profits there were operating expenses like those and then
operating profits down here that 7,500 thing then there were taxes and yeah
there are always taxes we can grumble about and then finally net income aka [Net income appears on balance sheet]
earnings but then below earnings you'll see that there are a hundred shares in
this little company the founder owns 60 of them mom owns 10 the new stepdad owns
20 he was guilted into it by you know the divorce lawyer and Enrique the
gardener for some reason who has cleverly weaseled his way into the
families arts and minds owns the last 10 its annual report time and the investors
want to know what their earnings per share were so that they can all compare
relative performance on their investments right so the total earnings
of the company in this example was five thousand two hundred fifty bucks which
means that the earnings per share of our little lemonade stand company here or
that 5,250 figure divided by a hundred or 52.50 a share that's [EPS formula appears]
what each share earned if you divvy the company into a hundred little pie slices
or parts so yeah earnings per share equals earnings per slice o pie or wait
lemonade pie has that been done yet time for a new business venture what do you [A plate of lemonade pie appears]
think we're taking investors just call us please
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