Per Share Basis - Explained
What is on a Per Share Basis?
If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
Table of ContentsWhat is on a Per-Share Basis?How is on a Per-Share Basis Used?KEY TAKEAWAYS Real-World Example of Cash Flow Per ShareAcademic Research on Per Share Basis
What is on a Per-Share Basis?
The per-share basis refers to a measurement utilized in the financial world to show the quantity of something for a share of a company's stock. Measures such as these are utilized in analyzing and evaluating a company. Instances of this include the following:
- Cash flow per share
- Revenue per share
- Earnings per share
- Debt per share
How is on a Per-Share Basis Used?
The per-share basis is a closely-monitored metric that investors can use to control a company's profitability per unit of shareholder ownership. In order to calculate something on a per-share basis, divide the total quantity of anything you're measuring by the number of company's outstanding shares. For instance, supposing a company's earnings get to $2 million, and have outstanding shares of 4 million, then the earnings on a per-share basis would be 0.50 per share. When the per-share basis is applied accurately, it can be effective when examining underlying factors in the profitability of a company. It can also be a way of discovering strengths, as well as, weaknesses which would be covered by just examining the overall results.
The per-share basis refers to a measurement utilized in the financial world to show the quantity of something for a share of a company's stock. The per-share basis is a closely-monitored metric which investors can use to control a company's profitability per unit of shareholder ownership. In order to calculate something on a per-share basis, divide the total quantity of anything you're measuring by the number of company's outstanding shares.
Real-World Example of Cash Flow Per Share
Cash flow per share is usually one of the most important profitability measures, as net income can differ based on various accounting rule applications and in response to corporate restatements and accounting changes. While cash flow can be generated from certain measures - including free cash flow, EBITDA (earnings before interest, tax, depreciation, and amortization), and other areas - it's generally less easily manipulated and thus a perfect way of assessing profitability. Cash flow per share = (Cash flow - Preferred dividends) / Shares outstanding Assume there is a fictional eCommerce Company by the name SellBuy, that reported overall 2nd quarter cash flow growth from the 1st quarter. How about on a per-share basis? During the 2nd quarter of 2018, SellBuy reported $5 million cash flow and preferred a $600,000 dividend, exceeding overall results in the 1st quarter, when it reported $4 million cash flow and preferred $200,000 dividends. It would look like, generally, that SellBuy did a quarter-to-quarter increase in cash flow, thus showing overall financial enhancement in its quarterly results. But is this accurate when analyzing what occurred on a per-share basis? Was there growth in cash flow on a quarter-to-quarter basis? In this instance, during the 1st quarter, SellBuy had 8 million shares outstanding in total while in the 2nd quarter, it had 10 million shares outstanding. The cash flow in the 1st quarter was $3,800,000 ($4 million worth of cash flow - $200,000 worth of dividends). In the 2nd quarter, $4,400,000 was the cash flow ($5 million worth of cash flow - $600,000 worth of dividends). Using this calculation, in the 1st quarter, the cash flow per shade we as follows: $3,800,000/8 million shares = $0.475 In the 2nd quarter, the cash flow per share was as follows: $4,400,000/10 million shares = $0.44 The example portrays that while SellBuy might have generated more cash flow in the 2nd quarter, on a cash-flow-per-share basis, it declined from the 1st quarter, as a result of it having more shares outstanding.
- Trend Analysis of Financial Statements
- Common-Size Analysis (Vertical Analysis) of Financial Statements
- Common-Size Financial Statement
- Net Dollar Retention
- Horizontal Analysis
- Per Share Basis
- Profitability Ratios
- Gross Margin Ratio
- Profit Margin
- After Tax Profit Margin
- Return on Assets
- Total Shareholder Return
- Cash on Cash Return
- Earnings Per Share
- Diluted Earnings Per Share
- Asset Turnover Ratio
- Berry Ratio
- Break-Even Analysis
- Liquidity Ratio
- Current ratio (Working Capital Ratio)
- Working Ratio
- Quick Ratio
- Quick Assets
- Days Sales Outstanding
- Cash Ratio (Operating Cash Flow Ratio)
- Receivables turnover ratio (often converted to average collection period)
- Accounts Payable Turnover Ratio
- Times Interest Earned
- Market Capitalization
- CAPE Ratio
- Price to Cash Flow Ratio
- Capital Maintenance
- Book to Bill Ratio
- Asset Turnover Ratio
- Plowback Ratio
- Days Inventory Outstanding
- Days Payable Outstanding
- Days Sales Outstanding
- Non-financial Performance Measures: The Balance Scorecard