Earnings per share is an indication of how much

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a financial ratio that indicates the amount of net income earned by a company for each share of outstanding common stock. It is calculated by dividing the net income by the number of shares outstanding. Therefore, option B is the correct answer as it states that EPS is an indication of the amount of money earned by the company for each share of outstanding common stock. Option A is incorrect because EPS does not consider the amount of cash the company has. Option C is incorrect because dividends per share (DPS) is the amount of dividends paid per share, not EPS. Option D is incorrect because EPS only considers the earnings for common stock, not preferred stock.

Earnings Per Share Is an Indication of How Much