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

Earnings per share (EPS) should be reported for each of the following income statement captions except:

Discontinued operations

Net income

Gross profit

Income from continuing operations

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Understand the concept of Earnings Per Share (EPS): EPS is a financial metric that measures the profitability of a company by dividing its net income by the number of outstanding shares. It is typically reported for key income statement captions to provide investors with insights into the company's performance.

Identify the income statement captions where EPS is commonly reported: EPS is generally reported for Net Income, Income from Continuing Operations, and Discontinued Operations. These captions are significant because they reflect the company's overall profitability and specific components of its operations.

Clarify why EPS is not reported for Gross Profit: Gross Profit represents the difference between sales revenue and the cost of goods sold (COGS). It is an intermediate measure of profitability and does not directly reflect the company's net earnings or comprehensive performance, which is why EPS is not associated with this caption.

Review the purpose of reporting EPS for specific captions: EPS is reported for captions that provide meaningful insights into the company's earnings attributable to shareholders, such as Net Income and Income from Continuing Operations. Discontinued Operations are also included because they represent a separate component of the company's performance.

Conclude that Gross Profit is the correct answer: Since EPS is not reported for Gross Profit, it is the exception among the listed captions. This distinction is important for understanding how EPS is applied in financial reporting.