To calculate earnings per share, preferred dividends declared
A) should be subtracted from profit.
B) should be added to profit.
C) have no impact on the earnings per share calculation.
D) must be added to the number of common shares issued.

Question

Quizplus · Accepted Answer

Preferred dividends declared should be subtracted from profit to calculate earnings per share (EPS) because EPS focuses on the earnings available to common shareholders, and preferred dividends are paid out before any earnings can be distributed to common shareholders.

To Calculate Earnings Per Share, Preferred Dividends Declared