EPS, and Not Net Income, Is the Measure of Firm

question 182

True/False

EPS, and not Net Income, is the measure of firm returns that stockholders normally use in determining whether financial leverage is favorable or unfavorable.

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Definitions:

Credit

An accounting entry that increases liabilities and equity or decreases an asset or expense account.

Note Receivable

A financial asset representing a promise to receive a specific amount of money, plus interest, from another party within a defined time frame.

Return

In finance, it refers to the profit or loss made on an investment over a specified period, expressed as a percentage of the initial investment.

Common Stockholders' Equity

The portion of a company's equity that is attributable to common stockholders, calculated as total assets minus total liabilities minus preferred stock equity.