In its most basic form,the earnings per share ratio is calculated as:
A)dividends paid on common stock divided by the average number of outstanding common shares.
B)net income divided by the average number of outstanding common shares.
C)total dividends paid divided by the average number of total stock shares.
D)net income divided by average stockholders' equity.

Question

Quizplus · Accepted Answer

Earnings per share ratio is calculated by dividing the net income of a company by the average number of outstanding common shares. This ratio helps investors and analysts to determine a company's profitability on a per-share basis, and how much each shareholder would receive if the company distributes its earnings. Options A, C, and D are not correct as they use incorrect measures to calculate earnings per share ratio.

In Its Most Basic Form,the Earnings Per Share Ratio Is