Earnings Per Share

Definition

A company's profit divided by the number of shares, giving you the illusion that you personally earned that amount per share you own. It's the finance world's way of making enormous numbers feel personal and tiny numbers feel acceptable.

Example Usage

"Our earnings per share beat estimates by a penny. The stock rallied 8%. That's right, ONE PENNY moved billions of dollars. This market is totally rational."

Related Terms

Beginner

Bear Market

A prolonged period when stock prices fall and investors pretend they saw it coming all along. Named after bears because, like encountering an actual bear, the best strategy is to play dead and hope it goes away before it eats your retirement fund.

💰 Finance / Accounting

Advanced

operating leverage

The degree to which a company's costs are fixed versus variable, determining how profits change with sales volume. High operating leverage means each additional sale drops straight to the bottom line—until sales drop and you discover fixed costs are indeed fixed.

💰 Finance / Accounting

Beginner

sweep account

A bank account that automatically transfers excess funds to higher-yielding investments overnight, then sweeps them back for daily operations. Like having a very diligent financial butler who never sleeps.

💰 Finance / Accounting

Intermediate

reserve

Resources, inventory, or funds deliberately kept back for future emergencies, strategic opportunities, or that inevitable moment when everything goes sideways. In business, it's the financial equivalent of keeping a spare tire in your trunk—boring until you desperately need it. Banks love reserves; accountants worship them; entrepreneurs pretend they have them.

💰 Finance / Accounting

Advanced

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, or as cynics call it, earnings before all the stuff that actually matters. It's the financial equivalent of saying you ran a marathon if you don't count the parts where you walked, stopped, and took an Uber.

💰 Finance / Accounting

Intermediate

days in inventory

The average number of days it takes to sell through inventory, calculated as (inventory / cost of goods sold) × 365. A metric that reveals whether you're efficiently managed or operating a museum of unsold products.

💰 Finance / Accounting

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