Which of the Following Statements About Earnings Per Share (EPS)

question 62

Multiple Choice

Which of the following statements about earnings per share (EPS) is correct?

• A)Increased net income would cause earnings per share to decrease.
• B)Issuance of more common shares would cause earnings per share to increase.
• C)Purchasing treasury shares would cause earnings per share to decrease.
• D)EPS is calculated using the number of common shares of stock outstanding.

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Definitions:

Synergy Value

The additional value generated from the combining of two or more entities, often expected in mergers or acquisitions.

All-Stock Deal

A type of acquisition where the acquiring company offers its own shares as payment to the shareholders of the target company instead of cash.

Post-Merger Firm

A company that results from the combination of two or more entities into one, through the process of a merger.

Incremental Value

The additional or extra value generated by undertaking a particular action or project compared to not doing so.