when management makes changes to increase ror the company s decisions also help increase earnings per share eps eps is an indicator of a company s profitability by comparing net income to the number of outstanding shares of common stock the higher the eps the more profitable a company is considered 
eps is calculated by dividing net income by the number of outstanding shares of common stock for example let s assume that a firm earns a total net income of 1 million per year and has 100 000 shares of common stock outstanding and eps is 1 000 000 100 000 shares or 10 per share if senior management can increase net income to 1 2 million and there is no change in common stock shares eps increases to 12 per share the increase in net income also increases ror however ror has no bearing on the number of shares outstanding both eps and ror measure the extent of the profit generated by a company companies issue shares of stock to generate funds to invest in the company and grow profits if a company generates a significant amount of net income as a result of the capital received from issuing shares of stock the company s management would be seen as growing earnings efficiently in other words earnings per share shows how much net income has been generated based on the quantity of shares outstanding a company that generates more earnings with a fewer number of shares outstanding than the competition would have a higher eps and be viewed more favorably by investors eps helps to show how effectively management is at deploying its resources to generate profit while eps measures the profit generated as a result of the number of outstanding stock shares ror measures the profit generated from the amount of revenue generated ror helps to show how effective a company s management is at increasing sales while managing the costs to run the business both metrics are important and should be used in tandem when evaluating a company s financial performance real world example of return on revenuebelow is the income statement for apple inc aapl for the fiscal year ending sept 28 2019 according to the company s 10 k filing to determine whether apple s return on revenue was favorable investors should compare the results to other companies within the same industry and during the same period investors can also calculate a company s ror for several periods to get a sense of how the ror has been trending 