### FREarningsPerCommonShare (NetProfit, PreferredDividend, NumOfCommonShare)

Basic and Crystal syntax.

##### Format

`FREarningsPerCommonShare(NetProfit, PreferredDividend, NumOfCommonShare)`

##### Arguments

- NetProfit is a Number or formula. NetProfit is the amount of earnings a company earns during the year from the sale of its products or services minus all the expense items. It is the bottom line figure in a company's income statement. Some analysts may want to use the net profit before extraordinary items and/or income taxes for calculating this ratio.
- PreferredDividend is a Number or formula. PreferredDividend is the total dividend paid out to the preferred shareholders during the accounting period being studied. This information can be found in a company's income statement and statement of change in financial position. It can also be derived in a company's balance sheet.
- NumOfCommonShare is a Number or formula. In general, NumOfCommonShare is the number of common shares issued and outstanding. This information can be found in a company's balance sheet.

##### Action

FREarningsPerCommonShare returns the ratio between net profit distributable to common shareholders (NetProfit-PreferredDividend) and NumOfCommonShare (for example, EarningPerCommonShare = (NetProfit - PreferredDividend) / NumOfCommonShare).

##### Typical uses

This ratio is used to calculate how much profit that a common share is entitled to. This ratio is used side by side with dividend per common share to determine the dividend pay out ratio. Some analysts may want to perform a fully diluted earnings per share. In this case, they have to take into account of all the common shares that will be converted from all the convertible preferred shares.

##### Examples

The following examples are applicable to both Basic and Crystal syntax:

`FREarningsPerCommonShare(550000, 50000, 100000)`

Returns 5.

`FREarningsPerCommonShare(450000, 10000, 2000000)`

Returns 0.22.

Note:

- None of the arguments can be negative; you may have to check for negative values before passing the arguments.
- NetProfit can not be smaller that PreferredDividend, otherwise you will receive an error message.

##### Comment

FREarningsPerCommonShare is one of the many financial analysis tools used in interpreting the financial position of a company. As in the case of all ratios, it has to be used with caution. It can just be used as a clue and not solid proof for forming a judgment on the financial status of a company.

Neither one of the ratios can be used alone for doing financial analysis and there are no fixed rules on the results of the ratios. Apart from differences between type of industries, result varies among different companies within the same industry and within different account periods. The results should only be used for relative comparison and trend analysis, rather than treating them as something absolute.

Seagate Software, Inc. http://www.seagatesoftware.com Please send comments to: techpubs@seagatesoftware.com