Which Statement Is Correct About Earnings Per Share (EPS)

question 81

Multiple Choice

Which statement is correct about earnings per share (EPS) ?

• A)A company's total earnings is more meaningful than its EPS.
• B)EPS represents the total amount of earnings of a company.
• C)EPS measures an ordinary share's interest in a company's earnings.
• D)The EPS is directly correlated with the company's stock price.

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Definitions:

Marginal Product

The extra production generated when one more unit of a particular input is added, with all other inputs remaining unchanged.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Extra Output

The additional production that is generated as a result of adding more of a variable input, such as labor or capital.

Diminishing Returns

A principle stating that as additional amounts of a variable input are added to a fixed input, beyond some point the marginal product of the variable input begins to decrease.