Which of the following statements is true about earnings per share?
A) It is the only ratio required to be disclosed on the statement of earnings.
B) It assesses the ability of the ﬁrm to pay their bills as they come due.
C) It evaluates the eﬃciency with which the company uses their assets to generate sales revenue.
D) It represents the proﬁt available to the preferred shareholders.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a unique financial metric because it is the only ratio that is required to be disclosed on the income statement (statement of earnings) by generally accepted accounting principles (GAAP). EPS measures the amount of profit that is available to the equity shareholders of the company on a per share basis, making it a critical metric for investors.

Which of the Following Statements Is True About Earnings Per