Asked by Nourhan Ashraf on Jun 24, 2024
Verified
Basic earnings per share is calculated by dividing
A) revenue by weighted average shareholders' equity.
B) revenue by the weighted average number of common shares.
C) income available to common shareholders by weighted average shareholders' equity.
D) income available to common shareholders by the weighted average number of common shares.
Basic Earnings Per Share
A measure of a company's profitability on a per-share basis, calculated by dividing net income by the number of outstanding ordinary shares.
Weighted Average
A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to each number.
- Comprehend the methodology and importance of fundamental earnings per share (EPS) and its significance to investors.
Verified Answer
CQ
Cinthia QuirozJun 30, 2024
Final Answer :
D
Explanation :
Basic earnings per share (EPS) is calculated by dividing the income available to common shareholders by the weighted average number of common shares outstanding during the period. This formula is used to give investors an idea of the company's profitability on a per-share basis.
Learning Objectives
- Comprehend the methodology and importance of fundamental earnings per share (EPS) and its significance to investors.
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