[Verse 1]
When investors want to know how much a company earned
They look beyond the total to see what each share returned
Net income tells the story but it's not the final call
We need to break it down per share to understand it all
[Chorus]
Basic EPS, it's easy as can be
Net income divided by shares outstanding, you see
Take the profit, divide it right
By weighted average shares in sight
Basic EPS shows profitability
Per share for you and me
[Verse 2]
Start with net income at the bottom of the sheet
That's the profit after all expenses have been beat
But shares can change throughout the year, they're not always the same
So weighted average is the key to play this calculation game
[Chorus]
Basic EPS, it's easy as can be
Net income divided by shares outstanding, you see
Take the profit, divide it right
By weighted average shares in sight
Basic EPS shows profitability
Per share for you and me
[Bridge]
If shares were issued mid-year through
Count them for the months they grew
January to December's end
Weight each month, then we can blend
Million shares times twelve months strong
Equals twelve million share-months long
[Verse 3]
Let's say net income hit five million this past year
And weighted average shares were two point five million here
Five divided by two point five equals two dollars clean
That's two dollars earned per share, the best measure you've seen
[Chorus]
Basic EPS, it's easy as can be
Net income divided by shares outstanding, you see
Take the profit, divide it right
By weighted average shares in sight
Basic EPS shows profitability
Per share for you and me
[Outro]
Now you know the foundation strong
For analyzing all year long
Basic EPS will be your guide
To see where profits truly hide