EPS, which stands for Encapsulated PostScript, is a file format for graphic data which uses a technology known as PostScript. It carries the extension, .eps. Because it can include vector data and bit map data, it is used as the file format for both these types of data. When creating an EPS file using Draw-type software (such as Adobe Illustrator and Inkscape, etc.), if bit map data is not included, the data becomes a vector data. If it includes bit map data, the bit map data part is treated as bit map data and the vector data part as vector data. EPS files created by using image processing software (such as Adobe Photoshop and Gimp, etc.) are bit map data. When an EPS file containing vector data is opened on an image processing software, the vector data is converted into bit map data. A bit map data EPS file is compatible with color modes such as CMYK, RGB, grayscale and monochrome black and white, etc. and is a standard file format, along with TIFF, for images used in printed publications. Compared to TIFF, EPS has a larger data size and requires longer output time. There is a function called a clipping path which allows the user to select the range for cutting out an image to place on different software. A clipping path can be applied on both EPS and TIFF, but if the image is going to be used on Adobe Illustrator, EPS should be used (Adobe InDesign supports both EPS and TIFF). Enhanced interoperability for PSD is offered on Adobe Systems products, so when working between Adobe Systems software, PSD may be used in place of the conventional EPS. Source.