Basic Earnings per Share

Question 1

What is a simple capital structure?

Answer 1

a simple capital structure is when a company has only common stock outstanding, or includes no potential common stock that upon conversion or exercise could dilute earnings per common share.

Question 2

What is earnings per share?

Answer 2

is the income common stockholders earned for each share of common stock outstanding for a reporting period. AKA EPS.

Question 3

What is the formula for basic earnings per share?

Answer 3

(Net Income - Preferred Dividends) / Weighted average common stock outstanding

Question 4

What is net income, as it relates to EPS?

Answer 4

is the income available to common stockholders at the end of a reporting period.