Earnings Per Share (EPS)

Question 1

Define Earnings Per Share

Answer 1

EPS is the amount of current-period earnings that can be associated w/ a single share of common stock

Question 2

In relation to BEPS, how is Preferred Stock Treated.

Answer 2

Preferred stock holders have superior claim and the amounts related to P/S must be removed from the calculation of BEPS.

Question 3

What is used to determine the value of the BEPS numerator?

Answer 3

Income Statement Amount
minus
Dividends on P/S (cumulative or declared non cumulative)

Question 4

How are Stock Dividend and Stock Splits accounted for in the calculation for the BEPS Denominator?

Answer 4

Adjusted retroactively to reflect change as if it occurred at the BEGINNING of the FIRST period presented.
Even if occur after the end of the current reporting period but before issuance of the statements.

Question 5

Dilution reduces BEPS due to the following assumptions…

Answer 5

1) Convertible securities
2) Options, Warrants exercised
3) Contingently C/S were issued

Question 6

Potential Common Shares (PCS) are included in the calculation of DEPS only if

Answer 6

The PCS are dilutive, reducing BEPS