Difference Between Earnings Yield and Earnings Per Share

Both the terms earnings yield and earnings per share can be assumed to be the same as they both refer to the profit or gain made by the investor.

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A person who risks both time and money to start and manage a business is called ___________.

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In case of death or insolvency of a partner the firm is?

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Office is a place where ___________.

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Overall and strategic planning is done by the ___________.

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Shares traded through stock exchanges are called __________.

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If a general manager asks the sales manager to recruit some salesman on his behalf, it is an instance of ___________.

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Small scale firms are ____________ flexible in their functioning.

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Earnings Yield vs Earnings Per Share

The difference between earning yield and earning per share is that earning yield is the ratio between earnings received by an investor from each share he invests, divided by the money he will receive if he or she sells the share in the market according to the current available price whereas the numerator required to calculate earnings yield is earning per share.

Earnings Yield vs Earnings Per Share

Earnings Yield is a very basic financial term that is important to understand. It basically helps the investor to understand that how much profit he or she gains with every unit of currency invested in the stock of a company.

Earnings per share is the calculation of the benefit received by the investor by each share he or she has invested in. This value is from the company’s point of view rather than that of the investor.

Comparison Table

Parameters of ComparisonEarnings YieldEarnings Per Share
Requirement The quantity of earnings per share is required in order to calculate this. It does not have the requirement of Earning Yield in order to be calculated.
Calculated byIt is mostly calculated by investors. It is mostly calculated by companies or organizations.
Helps InIt helps to determine if a particular stock is in a state of being sold or bought.It helps to estimate the benefit of the company with every share owned.
TaxIt generally includes taxes.It does not include taxes.
IndicatesIt helps to indicate whether a stock is undervalued or overvalued.It helps to determine the profit or benefit of the company.

What is Earnings Yield?

The term Earnings Yield is also used as earning price ratio. It is basically a ratio between the benefit earned per share divided by the latest price of the share in the market.

This quantity helps the investor recognize the amount of earning each unit of currency (e.g. 1 dollar) brings to him. It can be calculated in terms of percentage by multiplying the ratio by a hundred. 

Its inverse is represented by PE, which is a ratio calculated by inverting the numerator and denominator of the earnings yield calculation.

The current or latest earning yield of a particular stock may rise or fall depending upon its demand in the market or the decision of the company people.

The increased value of the earning yield indicates the perfect time of buying a particular stock, whereas it is lowering (that is, overvalued stock) indicates the perfect time for its sale.

earnings yield

What is Earnings Per Share?

It is calculated by including the profit and the dividends and excluding the tax to be paid divided by the number of basic or ordinary shares. It also acts as a numerator in order to calculate the earnings yield for the investor.

The higher value of the term indicates more number of investments by the investors as the main criteria for investment is determined by estimating the amount of profit an organization is getting from each of its shares.

The higher the term value, the more are the number of investors as all investors look for profit, and earning per share is an important criterion for the decision relating to the investment.

earnings per share

Main Differences Between Earnings Yield and Earnings Per Share

  1. Both of these terms have different methods of calculation.
  2. Earnings yield indicates investor’s profit, whereas earning per share determines that of the company being invested on.

References

  1. https://www.sciencedirect.com/science/article/pii/0304405X83900314
  2. https://www.jstor.org/stable/2490543
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