Earnings per share equals ________.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is a financial ratio that measures how much profit a company has generated per share of common stock. It is calculated by dividing the net income by the weighted average shares of outstanding common stock. Retained earnings divided by dividends (A) is not a measure of earnings per share but rather a measure of how much earnings are being retained by the company versus being paid out to shareholders. Earnings divided by preferred shares outstanding (C) is a measure of earnings per share for preferred shareholders only, not common shareholders. Net income divided by average total assets (D) is a measure of return on assets, not earnings per share.

Earnings Per Share Equals ________