Critics of EPS as a measure of profitability point out that it does not consider:
A) simple capital structures.
B) the amount of assets or capital required to generate a particular level of earnings.
C) the deduction of preferred stock dividends from net income.
D) adjustments for dilutive securities and the adjustment to weighted average number of
Shares outstanding for complex capital structures.

Question

Quizplus · Accepted Answer

EPS does not account for the amount of assets or capital required to generate earnings, which can be a limitation when assessing profitability.

Critics of EPS as a Measure of Profitability Point Out