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?


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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