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I am a complete beginner at this topic so please excuse my incompetence.

I've heard that EPS = (profit - dividend) / Shares Outstanding.

But why are we subtracting dividends? How can this be since the earnings per share either are used to pay out dividends or be reinvested into the company?

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Read the investopedia article Earnings Per Share - EPS

Earning per share give an indication of how much profits are allocated to a share. As dividends are paid out from the profits, they are subtracted to give an indication as to the pending profits per share.

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    The link states EPS is (profit - preferred stock dividends) / public shares, so there is a sense about being second in line behind preferred owners buried under the link, and our shares' dividend is not yet considered. – user662852 Jun 8 '15 at 12:16

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