What does earnings per share (EPS) measure?

Earnings per share (EPS) is a key financial metric that quantifies the amount of net income earned for each outstanding share of common stock. This measure is critical for investors because it allows them to assess a company's profitability on a per-share basis, which aids in comparing performance across companies and industries, regardless of their size.

When a company reports its earnings, EPS provides a clear insight into how much profit the company is generating in relation to each share of stock that investors hold, essentially reflecting the company's ability to translate its revenue into profits for shareholders. Additionally, EPS is often used in various financial ratios and performance metrics, making it a fundamental indicator of a company’s financial health.

The other choices focus on different aspects of financial performance but do not accurately define EPS. Total revenue earned per share refers to sales, not net income, while total expenses incurred per share would provide insight into costs rather than profitability. Lastly, the dividend amount per share relates specifically to the portion of profit distributed to shareholders, but it does not reflect the overall earnings situation of the company. Hence, the definition of EPS centers solely on net income earned per share of outstanding common stock, which makes it a vital concept in understanding a company's profitability from an investment standpoint.