Cash Earnings Per Share - Cash EPS

Cash earnings per share compares a company's cash flow to the number of shares it has currently outstanding. It brings the cash flow figure down to the level of the individual shareholders. You can find this measure by dividing operating cash flow by number of shares. This is a handy number because it shows exactly how much profit each share is worth.

Consider pies at a holiday party. Everyone has that one relative that binges on the pie you like, so you have to call dibs right? Don't feel bad, we all do this. Pie is serious business. At any given time, you want to know how big a slice you have coming to you, even if you don't eat it all right this second. Cash earnings per share is like that...it's how much of the pie is theoretically yours.

The figure should not be confused with earnings per share, which is net income divided by shares. Net income is not necessarily all available to be paid out to investors at a given moment, whereas cash is theoretically more easily distributed. (Not that the company will necessarily hand out any of that cash; that's up to the board of directors...it's not like you can go into company HQ with your shares and demand your cash earnings per share.) Generally, the cash earnings per share is considered a more accurate way to measure the stability of the business.