When Calculating Earnings Per Share, Preferred Dividends Are

question 103

Multiple Choice

When calculating earnings per share, preferred dividends are:

• A)added to net income in the numerator of the EPS calculation.
• B)added to common shares in the denominator of the EPS calculation.
• C)subtracted from common shares in the denominator of the EPS calculation.
• D)subtracted from net income in the numerator of the EPS calculation.

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Definitions:

Investing Sections

Refers to the part of the cash flow statement that shows the flow of cash related to investments in assets, securities, and other non-operational activities.

Financing Sections

Parts of financial statements or reports that detail funding activities like equity, debt issuance, and repayment of debt, providing insights into how a company finances its operations.

Cash Inflows

The total amount of money being transferred into a business, often from operations, investments, and financing activities.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in balance sheet accounts to calculate operating cash flow.