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 best describes how Earnings Per Share (EPS) is calculated?

Subtracting dividends paid from total revenue.

Multiplying net income by the number of common shares outstanding.

Dividing total assets by total liabilities.

Dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.

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Verified step by step guidance

Understand the concept of Earnings Per Share (EPS): EPS is a financial metric used to measure the profitability of a company on a per-share basis. It indicates how much profit is allocated to each outstanding share of common stock.

Identify the formula for EPS: The formula is EPS = (Net Income Available to Common Shareholders) / (Weighted Average Number of Common Shares Outstanding).

Clarify the components of the formula: Net Income Available to Common Shareholders is the company's net income after deducting any preferred dividends. The Weighted Average Number of Common Shares Outstanding accounts for changes in the number of shares during the period.

Explain the calculation process: To calculate EPS, first determine the net income available to common shareholders by subtracting preferred dividends (if any) from the total net income. Then, calculate the weighted average number of common shares outstanding during the period, considering any changes in share count.

Apply the formula: Divide the net income available to common shareholders by the weighted average number of common shares outstanding to arrive at the EPS value.