Earnings per share is a ratio that describes the amount of net income less preferred stock dividends available to the common shareholders.

Question

Quizplus · Accepted Answer

This statement accurately describes the calculation of earnings per share (EPS). EPS is calculated by dividing the net income minus any preferred stock dividends by the number of common shares outstanding. The result is the amount of earnings available to each common share.

Earnings Per Share Is a Ratio That Describes the Amount