Diluted Earnings Per Share

question 124

Multiple Choice

Diluted earnings per share

• A)is sometimes higher than basic earnings per share.
• B)takes into account all securities issued that can be converted into common shares.
• C)shows how many dollars were earned for each dollar invested by common shareholders.
• D)is not required to be disclosed for corporations reporting under IFRS.

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Definitions:

Book Value Per Share

A measure of a company's equity value as per its financial statements, divided by the number of outstanding shares.

Common Stock

Equity securities that represent ownership in a company, entitling the shareholder to voting rights and a share of the company's profits in the form of dividends.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its business or to pay debt.

Market/Book Ratio

A financial metric comparing a company's market value to its book value, indicating how much investors are willing to pay above the net asset value.