Earnings per share can be calculated as:

CS Executive · Financial and Strategic Management · PYQS · December 2020
Earnings per share can be calculated as:
(A) Use the income statement to determine earnings after taxes (net income) and divide by the previous period's earnings after taxes. Then subtract 1 from the previously calculated value.
(B) Use the income statement to determine earnings after taxes (net income) and divide by the number of common shares outstanding if no preference shares are outstanding.
(C) Use the income statement to determine earnings after taxes (net income) and divide by the number of common and preferred shares outstanding.
(D) Use the income statement to determine earnings after taxes (net income) and divide by the forecasted period's earnings after taxes. Then subtract 1 from the previously calculated value.

Answer & Explanation:

Correct Answer: Option (B)

Official answer key: (B).

Topics: Financial Management

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