Earnings per share is computed as
A)net income divided by total stockholders' equity.
B)EBIT divided by total stockholders' equity.
C)pretax income minus current taxes divided by total shares outstanding.
D)the addition to retained earnings divided by total shares outstanding.
E)net income divided by total shares outstanding.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated by dividing the net income by the total number of shares outstanding. This is the amount of earnings that each share of stock represents. Therefore, choice E, net income divided by total shares outstanding, is the correct formula for calculating EPS.

Earnings Per Share Is Computed as