Cash earnings per share compares a company's cash flow to the number of shares it has currently outstanding. It brings the cash flow figure down to the level of the individual shareholders. You can find this measure by dividing operating cash flow by number of shares. This is a handy number because it shows exactly how much profit each share is worth.
Consider pies at a holiday party. Everyone has that one relative that binges on the pie you like, so you have to call dibs right? Don't feel bad, we all do this. Pie is serious business. At any given time, you want to know how big a slice you have coming to you, even if you don't eat it all right this second. Cash earnings per share is like that...it's how much of the pie is theoretically yours.
The figure should not be confused with earnings per share, which is net income divided by shares. Net income is not necessarily all available to be paid out to investors at a given moment, whereas cash is theoretically more easily distributed. (Not that the company will necessarily hand out any of that cash; that's up to the board of directors...it's not like you can go into company HQ with your shares and demand your cash earnings per share.) Generally, the cash earnings per share is considered a more accurate way to measure the stability of the business.
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Finance: What are retained earnings?26 Views
Finance allah shmoop what are retained earnings You know when
you eat really salty food and the next day you
have cankles it's all that water desperately trying Teo get
youto wiz out the loads of sodium chloride in your
body That's retained water well retained earnings and i'll sort
of work the same way you run a plastic cup
stamping business with catchy little phrases on the cubs Last
year you had a million bucks in sales and one
hundred grand in after tax earnings About eighty grand of
that earnings was in fact cash Why didn't you retain
in cash one hundred percent of your earnings What happened
to the twenty grand in cash there How did evaporate
Well you had to spend cash out of your earnings
on a cup plunging machine and then cost real cash
dough You'll amber ties that cost over time now and
get essentially a tax break because of it meaning you'll
show lesson earning so you'll pay less in taxes but
the cash won't change So this year's hundred grand was
a nice year but last year you had fifty grand
in cash profits and you had twenty grand in cash
Profits the year before then and before then you had
run it just cash flow break even for the previous
five years So it all looked like that So in
total you saved Or rather you retained cash earnings of
eighty plus fifty plus twenty or a sum total of
one hundred fifty grand That all now sits in your
b of a account doing a whole lot of nothing
of intern two percent a year for the privilege that
one hundred fifty grand that you have cumulatively retained Like
ankle's swelling is retained earnings which you will now use
to print more catchy titles in foreign languages Maybe don't
look up What those mean All right let's close the 00:01:49.043 --> [endTime] video now
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