The number of shares used in the calculation of earnings per share is:
A) the number of ordinary and preference shares adjusted by a time-weighting factor which is the number of days in the reporting period that the shares are outstanding as a proportion of the total number of days in the period
B) the number of preference shares adjusted by a time-weighting factor which is the number of days in the reporting period that the shares are outstanding as a proportion of the total number of days in the period
C) the average of the number of ordinary shares outstanding at the beginning and end of the reporting period
D) the number of ordinary shares adjusted by a time-weighting factor which is the number of days in the reporting period that the shares are outstanding as a proportion of the total number of days in the period

Question

Quizplus · Accepted Answer

The number of shares used in the calculation of earnings per share is the number of ordinary shares adjusted by a time-weighting factor which is the number of days in the reporting period that the shares are outstanding as a proportion of the total number of days in the period. This is because earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

The Number of Shares Used in the Calculation of Earnings