Module 3 ยท Reading Financial Statements
Revenue is what a company earns; profit is what it keeps; EPS is profit per share.
Revenue (turnover) is the total money a company earns from selling its goods or services. It shows the size of the business.
Profit is what remains after all costs and taxes. Net profit (net income) is the bottom line - the money that can be reinvested or paid to shareholders.
Earnings per share (EPS) is net profit divided by the number of shares. It lets you compare profitability across companies of different sizes.
Example: TCS
TCS reports revenue in the tens of thousands of crores. Its EPS tells you how much profit each share earned, which investors compare against the share price to judge value.
Earnings per share (EPS) equals:
Why is it misleading to compare two companies' total profits without considering how many shares each has?