earnings per share is the ratio of net income after taxes to the number of common stock shares outstanding.

Sure, here is the step by step explanation:

1. Identify the Net Income: This is the company's total earnings or profit. It is calculated by subtracting all the company's expenses, including operating costs, material costs, tax, and more, from its total revenue.

2. Identify the number of common stock shares outstanding: This is the total number of a company's shares that are held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

3. Calculate the Earnings Per Share (EPS): Divide the net income by the number of outstanding shares. The formula is:

   EPS = Net Income / Number of Outstanding Shares

This ratio is used by investors to gauge a company's profitability. A higher EPS indicates more value because investors will pay more for a company's shares if they think the company has high profits relative to its share count.