What Are Weighted Average Shares?

If there is no change in the total shares of a listed company, there will be no weighted average difference in its annual earnings per share. At this time, it is not necessary to use the weighted average method to calculate the company's earnings per share; however, some companies have changed their total shares due to new issues (including the issuance of old shares and new shares), bonus issues, conversion of capital, or rights issues. The weighted average method should be used to calculate earnings per share, so that it can more accurately and reasonably reflect the objective profitability of the company.

Weighted average earnings per share

If the total amount of shares of a listed company has not changed, its annual

The stock market EPS is a code name for "weighted average earnings per share", which is calculated as follows:

P

= EPS

S0 + S1 + Si × Mi ÷ M0Sj × Mj ÷ M0-Sk

Among them: P is the net profit attributable to ordinary shareholders of the company or net profit attributable to ordinary shareholders after deducting non-recurring gains and losses; S is the weighted average number of ordinary shares outstanding; S0 is the total number of shares at the beginning of the period; S1 is the reporting period Increased the number of shares due to the conversion of provident fund to share capital or the distribution of stock dividends; Si refers to the increase in the number of shares due to the issue of new shares or debt-to-equity conversion during the reporting period; Sj refers to the reduction of the number of shares due to repurchase during the reporting period; M0 is the number of months in the reporting period; Mi is the cumulative number of months from the next month of increasing shares to the end of the reporting period; Mj is the cumulative number of months from the next month of decreasing shares to the end of the reporting period.

Take Nanjing Zhongshang (600280) as an example. The company's original total share capital was 86.26 million shares. On September 6, another 35 million new shares were issued, which reached 121.26 million shares. And Nanjing Zhongshang realized a net profit of 26.577 million yuan. Based on the original total share capital, the earnings per share were 26.957 million yuan / 86.26 million shares = 0.31 yuan.

In terms of weighted average earnings per share, Nanjing Zhongshang has a total share capital of 86.26 million shares and issued 35 million new shares in September. Only 3 months (October-December) of that year increased 35 million shares, which reached 121.26 million in total existing share capital. The average annual increase of shares is 35 million × 3/12 = 8.75 million shares. When calculating the earnings per share at the end of the period, the company's total share capital is calculated as 86.26 million plus 8.75 million, and the earnings per share is 26.957 million yuan ÷ ( 86.26 million shares + 8.75 million shares) = 0.28 yuan. That is, the weighted average earnings per share is 0.28 yuan.