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In: Finance

On a balance sheet, how would I find the revenue? Earnings? and Earnings per share? Also,...

On a balance sheet, how would I find the revenue? Earnings? and Earnings per share?

Also, how would i find the average growth rate of each?

Solutions

Expert Solution

Answer:

Revenue : - Revenue means the incomes generated from day to day operation of any organization

So, Revenue is the sales amount generated form day to day opeartions. This can not be found in balance sheet as it's neither an asset not a liability. Revenue is of nominal nature that means an income for the organization so, it can be found in Income statement.

You can find the average growth rate of revenue by comparing the revenue figure of current year with previous year that means (current year revenue - previous year revenue) / Previous year revenue

Suppose Company A has revenue in 2020 $120M and in 2019 $100M

Then the Average growth rate = ($120M-$100M) / $100M = $20M / $100M = 0.20 = 20%

Earnings

Earnings is the net income for any organization after interest and tax. Earnings can be found by refering the below calculation structure

You can find the average growth rate of earnings by comparing the earnings figure of current year with previous year that means (current year earnings - previous year earning) / Previous year earning

Suppose Company A has earning in 2020 $30M and in 2019 $20M

Then the Average growth rate = ($30M-$20M) / $20M = $10M / $20M = 0.50 = 50%

Earning Per Share (EPS)

Earnings per share is the net earning of any organization earned on one share outstanding that means Earnings per share (EPS) is a company's net profit divided by the number of common shares it has outstanding

It can be calulated by dividing the Net income (earnings) by Number of shares outstanding

For example : Company A has Net Earning = $30M and No. of shares outstanding = 100,000

EPS = 30,000,000 / 100,000 = $300 per share

We can find the average growth rate of EPS by comparing the EPS figure of current year with previous year that means (current year EPS - previous year EPS) / Previous year EPS

Suppose Company A has EPS in 2020 $300 and in 2019 $250

Then the Average growth rate = ($300-$250) / $250 = $50 / $250 = 0.20 = 20%

jeff jeffy answered 2 years ago
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