The Formula for Computing Earnings Per Share of Common Stock

question 168

Multiple Choice

The formula for computing earnings per share of common stock is

• A)(net income + interest expense)/ average total assets.
• B)net income/net sales.
• C)(net income - preferred dividends)/ average common stockholders' equity.
• D)(net income - preferred dividends)/ number of shares of outstanding common stock.

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Definitions:

Andrew Mellon

Andrew Mellon was an American banker, businessman, industrialist, philanthropist, art collector, and politician who served as the U.S. Secretary of the Treasury from 1921 to 1932.

Treasury

A government department responsible for managing the monetary resources, including revenue and expenditure, of a country or state.

Tariffs

Taxes imposed on imported goods, often used to protect domestic industries from foreign competition or to generate revenue.

Democratic Party

One of the two major contemporary political parties in the United States, traditionally associated with progressive and liberal policies.