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Cash earnings per share definition

Description

Cash earnings per share indicate the amount of operating cash flow per share. This ratio is similar to EPS. The only difference is that in this formula cash flow is used instead of net income. Cash earnings per share is a common indicator of a company's financial performance. Data to calculate this ratio is collected from the statement of retained earnings and cash flow statement.

Company’s cash earnings per share can be compared with other companies’ cash EPS – that’s why it is important for the investors.

While making a comparison to other companies’ ratios earnings per share of current company must be divided by its nominal value (face value) of the share.

Norms and limitations

The higher value of the ratio, the better.

High value indicates better performance of the company during the year (or other period).

Formula

Operating cash flow (OCF, cash flow from operations) is the money that a company earns from its core business.

Shares outstanding might be explained as issued and outstanding shares.