Cash Earnings Per Share

Is computed using cash flows from business operations as the numerator. This value is determined by adding non-cash expenses, such as depredation and amortization to net profits available to equity owners, Thus,

Net profit available to equity-owners + Depreciation + Amortization

1

The ratio indicates the cash generating ability (per equity share) of the firm. Like EPS, cash EPS should be used with caution. It is beset with all the limitations associated with EPS measure.

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