The denominator in the earnings per share formula is? a.preferred dividends. b.net income. c.number of preferred shared outstand

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ing. d.number of common shares outstanding.

1 answer:

astra-53 [7] · Answer 1 · 2023-12-11T08:35:02+03:00

The denominator in the earnings per share formula is number of common shares outstanding.

What is the denominator used in the computation of earnings per share?

The weighted average of the outstanding shares of common stock serves as the numerator of the earnings per share.
The "per share" part necessitates further computation when the number of common shares changes in the middle of the year.
The weighting of the per share part depends on how long each share number has been in circulation.

How are basic earnings per share determined?

Basic EPS is calculated by dividing net income by the weighted average of the common shares outstanding for the relevant period.
Preferred dividends should be removed from the net income because they are not available to common stockholders.
Net income can also be broken down into "continuing operations" P&L and "total P&L".

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