What is the purpose of computing the earnings per share ratio?
A) To determine which firm gets the most out of its resources
B) To determine the net profit margin
C) To measure a firm's ability to meet its current liabilities
D) To attract investors
E) To measure the net income earned by a business for each dollar invested

Question

Quizplus · Accepted Answer

The purpose of computing the earnings per share ratio is to measure the net income earned by a business for each dollar invested. This ratio is commonly used to provide information to potential investors about the profitability of a company and their potential return on investment. It can also be helpful for existing shareholders to evaluate the company's performance and make informed decisions about holding, buying, or selling shares.

What Is the Purpose of Computing the Earnings Per Share