Earnings per common share is one factor that influences the decision to use debt financing or equity financing.

Question

Quizplus · Accepted Answer

Earnings per common share, which is calculated by dividing net income by the number of outstanding shares, is a key metric used by investors and analysts to evaluate a company's profitability and financial health. When a company's earnings per share are high, it may be more attractive to use equity financing to maintain or increase ownership in the company, while when earnings per share are lower, debt financing may be a more viable option to avoid diluting existing shareholders' ownership.

Earnings Per Common Share Is One Factor That Influences the Decision