Earnings per share” (EPS) is the most featured, single financial statistic about modern corporations. Daily published quotations of stock prices have recently been expanded to include for many securities a “times earnings” figure that is based on EPS. Stock analysts often focus their discussions on the EPS of the corporations they study.


  • Explain how dividends or dividend requirements on any class of preferred stock that may be outstanding affect the computation of EPS.
  • One of the technical procedures applicable in EPS computations is the “treasury-stock method.”
  • Briefly describe the circumstances under which it might be appropriate to apply the treasury-stock method.
  • Convertible debentures are considered potentially dilutive common shares. Explain how convertible debentures are handled for purposes of EPS computations.

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Business Finance

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