The ratio that uses weighted average common shares outstanding in the denominator is the
A) price-earnings ratio.
B) return on common stockholders' equity.
C) earnings per share.
D) payout ratio.

Question

Quizplus · Accepted Answer

The earnings per share (EPS) ratio uses weighted average common shares outstanding in the denominator to calculate the earnings per share for a company. This ratio helps investors and analysts understand how much profit is generated for each outstanding share of common stock. The formula for EPS is net income divided by weighted average common shares outstanding.

The Ratio That Uses Weighted Average Common Shares Outstanding in the Denominator