Which of the following affect the earnings per share?I. decrease in interest expense
II. share repurchase
III. increase in tax rates
IV. preferred stock dividend
A)I and III only
B)II and IV only
C)I, II, and III only
D)II, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

All four options affect the earnings per share (EPS). A decrease in interest expense increases net income, thus increasing EPS. Share repurchase reduces the number of outstanding shares, increasing EPS. An increase in tax rates decreases net income, thus decreasing EPS. Preferred stock dividends reduce the earnings available to common shareholders, thus affecting EPS.

Which of the Following Affect the Earnings Per Share?I