Which of the following statements is true of earnings per share?
A)A company must pay tax on the earnings per share.
B)Earnings per share can be maximized by changing from corporation to proprietorship form of organization.
C)A company can maximize its value by maximizing earnings per share.
D)Earnings per share is often used as an indication of the firm's potential for generating future cash flows.
E)A high earnings per share in the current period results in lower future risk position of the business.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a key indicator used by investors to gauge the profitability of a company and its potential for generating future cash flows. It represents the portion of a company's profit allocated to each outstanding share of common stock, serving as a marker of the company's financial health.

Which of the Following Statements Is True of Earnings Per