How to Calculate Profit Earned per Share

Profit Earned Per Share Calculator

Use this calculator to determine the profit or loss you've made on a stock transaction, both per share and in total, after accounting for brokerage commissions.

function calculateProfitPerShare() { var sellingPricePerShare = parseFloat(document.getElementById('sellingPricePerShare').value); var purchasePricePerShare = parseFloat(document.getElementById('purchasePricePerShare').value); var numberOfShares = parseInt(document.getElementById('numberOfShares').value); var totalCommission = parseFloat(document.getElementById('totalCommission').value); var resultDiv = document.getElementById('profitResult'); if (isNaN(sellingPricePerShare) || isNaN(purchasePricePerShare) || isNaN(numberOfShares) || isNaN(totalCommission) || numberOfShares = 0 ? "Profit" : "Loss"; var profitStatusTotal = totalNetProfit >= 0 ? "Profit" : "Loss"; resultDiv.innerHTML = "

Calculation Results:

" + "Net " + profitStatusPerShare + " Per Share: $" + netProfitPerShare.toFixed(2) + "" + "Total Net " + profitStatusTotal + ": $" + totalNetProfit.toFixed(2) + ""; } .profit-per-share-calculator { font-family: Arial, sans-serif; background-color: #f9f9f9; padding: 20px; border-radius: 8px; box-shadow: 0 2px 4px rgba(0,0,0,0.1); max-width: 600px; margin: 20px auto; } .profit-per-share-calculator h2 { color: #333; text-align: center; margin-bottom: 20px; } .profit-per-share-calculator p { color: #555; line-height: 1.6; } .calculator-form label { display: inline-block; margin-bottom: 5px; font-weight: bold; width: 200px; } .calculator-form input[type="number"] { width: calc(100% – 210px); padding: 8px; margin-bottom: 10px; border: 1px solid #ddd; border-radius: 4px; box-sizing: border-box; } .calculator-form button { background-color: #007bff; color: white; padding: 10px 15px; border: none; border-radius: 4px; cursor: pointer; font-size: 16px; display: block; width: 100%; margin-top: 15px; } .calculator-form button:hover { background-color: #0056b3; } #profitResult { margin-top: 20px; padding: 15px; border: 1px solid #e0e0e0; border-radius: 4px; background-color: #eaf6ff; color: #333; } #profitResult h3 { color: #007bff; margin-top: 0; } #profitResult p { margin: 5px 0; }

Understanding Profit Earned Per Share

Profit earned per share is a fundamental metric for investors to evaluate the success of their stock trades. It quantifies the net gain or loss an investor realizes for each individual share after accounting for all relevant costs, primarily the purchase price, selling price, and transaction fees like brokerage commissions.

Why is Profit Earned Per Share Important?

• Performance Evaluation: It provides a clear, per-unit measure of how profitable a specific investment was, allowing for easy comparison across different trades or stocks.
• Decision Making: Understanding your profit per share helps in making informed decisions about future investments, setting stop-loss orders, or determining target selling prices.
• Cost Awareness: It highlights the impact of transaction costs (like commissions) on your overall profitability, especially for smaller trades.

How to Calculate Profit Earned Per Share

The basic formula for profit earned per share involves three main components:

1. Selling Price per Share: The price at which you sold each share.
2. Purchase Price per Share: The price at which you initially bought each share.
3. Transaction Costs per Share: This includes brokerage commissions and any other fees associated with both buying and selling the shares, divided by the number of shares.

The formula can be broken down as follows:

Gross Profit Per Share = Selling Price Per Share - Purchase Price Per Share

Commission Per Share = Total Brokerage Commission / Number of Shares

Net Profit Per Share = Gross Profit Per Share - Commission Per Share

And for the total profit:

Total Net Profit = Net Profit Per Share × Number of Shares

Example Scenario:

Let's say you bought 100 shares of Company X at $100 per share. You later sold these shares at $120 per share. Your total brokerage commission for both the buy and sell transactions was $10.

• Selling Price per Share: $120
• Purchase Price per Share: $100
• Number of Shares: 100
• Total Brokerage Commission: $10

Using the calculator above, you would input these values:

• Gross Profit Per Share = $120 – $100 = $20
• Commission Per Share = $10 / 100 = $0.10
• Net Profit Per Share = $20 – $0.10 = $19.90
• Total Net Profit = $19.90 * 100 = $1990.00

This means you earned $19.90 for each share you traded, resulting in a total profit of $1990.00 from the transaction.

Factors Affecting Profit Per Share

• Market Volatility: Rapid price swings can significantly impact your selling price relative to your purchase price.
• Company Performance: Positive news, strong earnings, or growth prospects can drive up a stock's price, increasing potential profit.
• Transaction Costs: High commissions, especially for small trades, can eat into your profits. Discount brokers often offer lower fees.
• Holding Period: Long-term capital gains (for assets held over a year) are often taxed at a lower rate than short-term gains, impacting your after-tax profit.
• Dividends: While not directly part of the per-share profit calculation from price appreciation, dividends received during the holding period add to the overall return on investment.

Conclusion

Calculating profit earned per share is a straightforward yet powerful tool for investors. It helps in understanding the true profitability of a trade, factoring in all direct costs, and is essential for effective portfolio management and strategic investment planning.