- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 2. Analyzing Income Statements
- Subject 5. Earnings per Share
CFA Practice Question
By what must a company divide net earnings available to common shareholders in computing earnings per common share?
B. Average number of common shares issued
C. Average number of common shares outstanding
A. Ending number of common shares issued
B. Average number of common shares issued
C. Average number of common shares outstanding
Correct Answer: C
Earnings per common share are equal to net earnings available to common shareholders divided by the average number of common shares outstanding.
User Contributed Comments 5
| User | Comment |
|---|---|
| kalps | EPS = Net earnings available to common shareholders/AVRG no pf common shares OUTSTANDING |
| sarath | Remember the denominator is the weighted average of the common shares outstanding. |
| jpducros | The key word in the WASO is "COMMON" ;-) |
| renataa | whats the difference btw outstanding and issued? |
| fredpat01 | issued shares could be repurchased. |