Strait Company has outstanding shares as follows: 16,000 common shares and 5,000 preferred shares.What is the number of shares that should be used in the denominator to compute earnings per share?
A)5,000
B)16,000
C)18,000
D)21,000

Question

Quizplus · Accepted Answer

Earnings per share (EPS) is calculated using only the common shares outstanding, which in this case is 16,000. Preferred shares are not included in the EPS calculation denominator.

Strait Company Has Outstanding Shares as Follows: 16,000 Common Shares