Earnings per share represents how much
A)of a company's current net income has been distributed for each share of stock held by an investor.
B)of a company's current net income can be distributed for each share of stock held by an investor.
C)of a company's contribution margin is available to be distributed to each stockholder.
D)gross profit of a company can be distributed for each share of stock held by an investor.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a financial metric that calculates the portion of a company's net income that is available for distribution to each share of stock owned by investors. EPS is calculated by dividing a company's net income by the total number of outstanding shares of its stock. So, option B is correct. Option A is incorrect because EPS represents what can be distributed, not what has been distributed. Option C is incorrect because EPS is not related to contribution margin. Option D is incorrect because EPS is based on net income, not gross profit.

Earnings Per Share Represents How Much