CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

For a firm with a simple capital structure, all of the following are necessary to measure basic earnings per share (EPS) EXCEPT ______.

I. dividends paid to preferred shareholders
II. number of shares outstanding at the beginning of the year
III. the timing and number of shares issued or repurchased during the year
IV. dividends paid to common shareholders
A. I and IV
B. II and III
C. IV only
Explanation: Basic EPS = earnings available to common shareholders divided by the weighted average number of common shares outstanding. Earnings available to common shareholders equals net income - preferred dividends. The weighted number of common shares outstanding equals the number of shares outstanding during the year weighted by the proportion of the year they were outstanding.

User Contributed Comments 1

User Comment
ColonelCFA Don't over think it. This isn't a question comparing simple to complex capital structures.
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