Earnings per share is calculated as: A) net income ÷ weighted average common shares outstanding. B) (net income - preferred dividends) ÷ average common stockholders' equity. C) weighted average common shares outstanding ÷ net income. D) average common stockholders' equity ÷ (net income - preferred dividends). E) operating income ÷ average common stockholders' equity.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated by dividing net income by the weighted average number of common shares outstanding during the period. This formula does not subtract preferred dividends, as that adjustment is made when calculating diluted EPS or when specifically accounting for preferred dividends in basic EPS calculations.

Earnings Per Share is Calculated As