When comparing a company's results from one year to the next, what kind of information does a company's earnings per share figure provide?
A) Whether the company generates more or less profit per sales dollar
B) Whether the market price of a share of stock has gone up or down
C) Whether the company's total net income has gone up or down
D) Whether the amount of profit generated by one share of stock has gone up or down

Question

Quizplus · Accepted Answer

Earnings per share is the amount of profit generated by each outstanding share of common stock. By comparing the earnings per share figures from one year to the next, investors and analysts can determine whether the amount of profit generated by one share of stock has gone up or down. This figure takes into account any dilution from additional shares issued during the period.

When Comparing a Company's Results from One Year to the Next