Given that Company A has a Net Income of $10 and 10 shares outstanding, what is its EPS (Earnings Per Share)?

Given that Company A has a Net Income of $10 and 10 shares outstanding, what is its EPS (Earnings Per Share)?

• A. $0.50
• B. $1.00
• C. $2.00
• D. $1.50

Answer: (B)

To calculate Earnings Per Share (EPS), you divide the company’s net income by the number of shares outstanding. In this case, Company A has a net income of $10 and 10 shares outstanding. The formula for EPS is: \[ \text{EPS} = \frac{\text{Net Income}}{\text{Shares Outstanding}} \] Plugging in the numbers: \[ \text{EPS} = \frac{10}{10} = 1.00 \] Thus, the EPS for Company A is $1.00, which matches the choice selected. This figure reflects the earnings attributable to each share of common stock, making it a fundamental measure of a company's profitability on a per-share basis. Understanding EPS helps investors gauge the financial health of the company and perform comparisons with other companies in the same industry.

To calculate Earnings Per Share (EPS), you divide the company’s net income by the number of shares outstanding. In this case, Company A has a net income of $10 and 10 shares outstanding.

The formula for EPS is:

[ \text{EPS} = \frac{\text{Net Income}}{\text{Shares Outstanding}} ]

Plugging in the numbers:

[ \text{EPS} = \frac{10}{10} = 1.00 ]

Thus, the EPS for Company A is $1.00, which matches the choice selected. This figure reflects the earnings attributable to each share of common stock, making it a fundamental measure of a company's profitability on a per-share basis. Understanding EPS helps investors gauge the financial health of the company and perform comparisons with other companies in the same industry.