This proforma earnings per share template shows you how to calculate the earnings per share assuming a merger and acquisition takes place.
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Proforma earnings per share (EPS) is the calculation of EPS assuming a merger and acquisition (M&A) takes place and all financial metrics, as well as the number of shares outstanding, are updated to reflect the transaction. “Pro forma” in Latin means “for the sake of form.” In this case, it refers to calculating EPS “for the sake of form” in the event of the acquisition.
Basic EPS is calculated by dividing a firm’s net income by its weighted shares outstanding. The pro forma EPS, on the other hand, adds the target firm’s net income and any additional synergies or incremental adjustments to the numerator, while adding new shares issued due to the acquisition to the denominator.
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