The earnings per share will:
A) increase as net income increases.
B) increase as the number of shares outstanding increase.
C) decrease as the total revenue of the firm increases.
D) increase as the tax rate increases.
E) decrease as the costs decreasE.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated by dividing net income by the number of shares outstanding. Therefore, as net income increases, EPS will also increase. Option B is incorrect as an increase in the number of shares outstanding will dilute the EPS, causing it to decrease. Option C is incorrect as total revenue has no direct impact on EPS calculation. Option D is incorrect as an increase in tax rate will decrease net income and therefore EPS. Option E is incorrect as a decrease in costs will increase net income and therefore EPS.

The Earnings Per Share Will