Which of the following statements about earnings per share is correct?
A) Increased net income would cause earnings per share to decrease.
B) Issuance of more common shares would cause earnings per share to increase.
C)Purchasing treasury shares would cause earnings per share to decrease.
D)It is calculated using the number of common shares of stock outstanding.

Question

Quizplus · Accepted Answer

Earnings per share is calculated by dividing the net income of a company by the number of common shares of stock outstanding. Choice A is incorrect as an increase in net income would result in higher earnings per share. Choice B is incorrect as issuing more common shares would dilute the earnings per share, resulting in a decrease. Choice C is incorrect as purchasing treasury shares would decrease the number of shares outstanding, thereby increasing the earnings per share.

Which of the Following Statements About Earnings Per Share Is