Earnings Per Share Are Calculated by Dividing Net Income Minus

question 32

True/False

Earnings per share are calculated by dividing net income minus preferred dividends by the average number of shares of common stock outstanding.

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Definitions:

Operating Assets

Assets used in the daily operations of a business to generate income, such as equipment, inventory, and accounts receivable.

Division ROI

Return on Investment for a specific division or segment within a company, measuring profitability in relation to its operating assets.

Variable Expenses

Expenses that change in proportion to the activity of a business.

Fixed Costs

Operating expenses that stay constant regardless of changes in the level of output or sales volume, like leases and salaries.