Earnings per share
A) will increase if net income increases and number of shares remains constant.
B) will increase if net income decreases and number of shares remains constant.
C) is number of shares divided by net income.
D) is the amount of money that goes into retained earnings on a per share basis.
E) None of these.

Question

Quizplus · Accepted Answer

Earnings per share is calculated by dividing net income by the number of outstanding shares. Therefore, if net income increases and the number of shares remains constant, earnings per share will increase. Option B is incorrect because net income decreasing would result in a decrease in earnings per share. Option C is also incorrect as it is the opposite way around - earnings per share is net income divided by the number of shares. Option D is not accurate as earnings per share is a measure of the profitability of the company, not the amount of money going into retained earnings.

Earnings Per Share