What is described as a measure of a company's profitability?

Earnings per share (EPS) is a widely recognized measure of a company's profitability, reflecting the amount of net income earned per share of outstanding common stock. It provides a direct indicator of a company’s profitability on a per-share basis, which is particularly useful for comparing the performance of companies within the same industry. Investors often look at EPS when evaluating a company’s financial health and making investment decisions, as it represents the portion of a company’s profit allocated to each share of common stock.

Additionally, while other options like Return on Equity (ROE) and Net Profit Margin also gauge profitability, they do so in different contexts. ROE measures the return generated on shareholders' equity, and Net Profit Margin shows the percentage of revenue that remains after all expenses, but EPS directly links net income with the number of shares, making it a straightforward profitability measure for shareholders.