Earnings per share is an indication of how much
A)cash the company has for each share of all outstanding stock.
B)earnings the company has for each share of outstanding common stock.
C)earnings the company has for each share of all outstanding stock.
D)dividends the company paid for each share of outstanding common stock.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a financial ratio that measures the profitability of a company. It is calculated by dividing the earnings available to common shareholders by the average number of common shares outstanding during the period. Therefore, EPS represents the earnings that a company generates for each share of outstanding common stock, making option B the correct choice. Option A is incorrect because EPS does not take into account the company's cash position. Option C is incorrect because EPS only refers to common stock, not to all outstanding stock. Option D is incorrect because EPS measures earnings, not dividends.

Earnings Per Share Is an Indication of How Much