Which statement is correct about basic EPS?
A)It indicates the profitability attributable to a company's dilutive shares.
B)It indicates the profitability attributable to a company's ordinary shares.
C)It indicates the market price attributable to a company's ordinary shares.
D)It indicates the market price attributable to a company's dilutive shares.

Question

Quizplus · Accepted Answer

Basic EPS (Earnings per Share) represents the portion of a company's profit that is attributable to each ordinary share. It does not take into account any dilution from potential shares such as stock options or convertible bonds. Hence, option (B) is correct. Options (A), (C), and (D) are incorrect as they do not represent the purpose of Basic EPS.

Which Statement Is Correct About Basic EPS