If a company has no preferred stock, basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

Question

Quizplus · Accepted Answer

Basic earnings per share is calculated by dividing the net income by the total number of common shares outstanding, which includes both outstanding common shares and any potentially dilutive securities. If there are no preferred stocks, then the total number of outstanding shares is equal to the number of weighted average common shares outstanding. Therefore, basic earnings per share is equal to net income divided by the number of weighted average common shares outstanding.

If a Company Has No Preferred Stock, Basic Earnings Per