When calculating earnings per share, the amount of dividends payable to the common shareholders must be deducted from the profit of the company.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated by dividing the net income available to common shareholders by the average number of common shares outstanding during the period. Dividends payable to common shareholders are not deducted from the profit of the company in the calculation of EPS.

When Calculating Earnings Per Share, the Amount of Dividends Payable