The Stock Earnings Calculator helps investors and traders quantify their profit or loss from a stock investment, taking into account not only the change in stock price but also any dividends received and the costs associated with trading. This provides a comprehensive view of the overall return on investment.
How the Calculation Works
The calculator uses the following formula to determine your total earnings:
Total Earnings = (Current Price Per Share – Purchase Price Per Share) * Number of Shares + (Dividends Per Share * Number of Shares) – Commission Costs
Let's break down each component:
Capital Gain/Loss: This is the difference between the current market price and the price you paid for the stock, multiplied by the number of shares you own. If the current price is higher than the purchase price, you have a capital gain. If it's lower, you have a capital loss.
Dividends Received: Many stocks pay out a portion of their profits to shareholders in the form of dividends. This is an additional source of return that is factored into your total earnings.
Commission Costs: When you buy or sell stocks, brokers typically charge a commission fee. These costs reduce your overall profit, so they are subtracted from the total gains.
Example Calculation
Let's say you bought 100 shares of XYZ Corp. at $50.25 per share. Your total purchase cost, including $10 in commission fees, was (50.25 * 100) + 10.00 = $5,035.00.
After some time, the stock price has risen to $65.50 per share, and XYZ Corp. has paid out $1.20 per share in dividends during your holding period. You also incurred another $10 in commission fees when you eventually sold the stock.
Using the calculator inputs:
Purchase Price Per Share: $50.25
Number of Shares: 100
Current Price Per Share: $65.50
Dividends Per Share: $1.20
Commission Costs: $10.00 (representing the total commission for buying AND selling, or if the calculator is only for one leg, it should be clear)