Strait Company has outstanding shares as follows: 16,000 common shares and 5,000 preferred shares. What is the number of shares that should be used in the denominator to compute earnings per share?
A) 5,000
B) 16,000
C) 11,000
D) 21,000

Question

Quizplus · Accepted Answer

Earnings per share (EPS) calculations only consider common shares, so the 16,000 common shares are used in the denominator. Preferred shares are not included in EPS calculations.

Strait Company Has Outstanding Shares as Follows: 16,000 Common Shares