1. The different profit measures on income statement are as follows :-

• Gross Profit (gross income or gross margin): A company's gross profit does more than simply represent the difference between net sales and the cost of sales. Gross profit provides the resources to cover all of the company's other expenses. Obviously, the greater and more stable a company's gross margin, the greater potential there is for positive bottom line (net income) results.
• Operating Profit: Deducting SG&A from a company's gross profit produces operating income. This figure represents a company's earnings from its normal operations before any non-operating income and/or costs such as interest expense, taxes, and special items. Income at the operating level, which is viewed as more reliable, is often used by financial analysts rather than net income as a measure of profitability.
• Pretax Profit: Another carefully watched indicator of profitability, earnings garnered before the income tax expense is an important bullet in the income statement. Numerous and diverse techniques are available to companies to avoid and/or minimize taxes that affect their reported income. Because these actions are not part of a company's business operations, analysts may choose to use pretax income as a more accurate measure of corporate profitability.
• Net Income (net profit or net earnings): This is the bottom line, which is the most commonly used indicator of a company's profitability. Of course, if expenses exceed income, this account caption will read as a net loss. After the payment of preferred dividends, if any, net income becomes part of a company's equity position as retained earnings. Supplemental data is also presented for net income based on shares outstanding (basic) and the potential conversion of stock options, warrants, etc. (diluted).

2. EPS = total earnings/ Outstanding shares = $270,000/100,000 = 2.7