Earnings Per Common Share Result from Dividing Net Income

question 39

Multiple Choice

Earnings per common share result from dividing net income

• A)minus preferred stock dividends by the weighted-average number of outstanding common shares during the accounting period.
• B)by the weighted-average number of outstanding common shares during the accounting period.
• C)minus common stock dividends by the end-of-year number of outstanding common shares.
• D)minus preferred stock dividends by the end-of-year number of outstanding common shares.
• E)by the end-of-year number of outstanding common shares.

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Definitions:

Long-Term Debt

Financial obligations of a company that are due more than one year in the future, often used for significant projects or to purchase assets.

Debt-Equity Ratio

A ratio indicating a firm's financial leverage, determined by dividing its total debts by its shareholder equity.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its customers by dividing total net credit sales by the average accounts receivable.

Net Working Capital

This is a measure of a company's liquidity, calculated as the difference between its current assets and current liabilities.