Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Earnings Per Share (EPS)

Financial Accounting

14. Financial Statement Analysis

Ratios: Earnings Per Share (EPS)

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Multiple Choice

Which of the following financial measures is used to calculate Earnings Per Share (EPS)?

Total assets divided by total liabilities

Operating income divided by interest expense

Net sales divided by average total assets

Net income attributable to common shareholders divided by the weighted average number of common shares outstanding

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Verified step by step guidance

Understand the concept of Earnings Per Share (EPS): EPS is a financial metric that measures the profitability of a company on a per-share basis. It is calculated by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding.

Identify the numerator: The numerator in the EPS formula is the net income attributable to common shareholders. This is the portion of the company's net income that is available to holders of common stock after preferred dividends (if any) have been subtracted.

Identify the denominator: The denominator in the EPS formula is the weighted average number of common shares outstanding during the reporting period. This accounts for any changes in the number of shares outstanding over time, such as stock issuances or buybacks.

Write the formula for EPS: The formula is expressed as:

\frac{Net Income Attributable to Common Shareholders}{Weighted Average Number of Common Shares Outstanding}

Compare the options provided: The correct measure for calculating EPS is 'Net income attributable to common shareholders divided by the weighted average number of common shares outstanding,' as it aligns with the formula and definition of EPS.