Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Question
Chapter 20, Problem 20.1Q
To determine
To explain: The use of earnings per share information by the financial statement analysts.
Expert Solution & Answer
Answer to Problem 20.1Q
Earnings per share is a measure which is useful in order to make ease of evaluation for all the investors before making investment to a particular company.
Explanation of Solution
Earnings per share:
EPS or Earnings per share measure the level of earnings that are finally payable to the investors or the shareholders of the company.
- An earnings per share is a measure which is used by various investors before investing to evaluate the price earnings ratios of stocks.
- It is considered as an important measure to help the investors to evaluate the company’s financial position overtime in which they have invested their funds.
- It can be calculated as earnings attributable to holders divided by the number of shares of a particular financial year. The formula for this same is given below:
Conclusion
Therefore, EPS is important for the shareholders to evaluate a company’s financial position in order to make appropriate investment decision.
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Chapter 20 Solutions
Intermediate Accounting (2nd Edition)
Ch. 20 - Prob. 20.1QCh. 20 - Prob. 20.2QCh. 20 - If-Converted Method. Does the if-converted...Ch. 20 - Diluted EPS. If all potentially dilutive...Ch. 20 - Diluted EPS. Can diluted earnings per share on...Ch. 20 - Diluted EPS, Convertible Debt, and Preferred...Ch. 20 - Prob. 20.7QCh. 20 - Prob. 20.8QCh. 20 - Prob. 20.9QCh. 20 - EPS Disclosures. is an entity required to present...
Ch. 20 - Prob. 20.11QCh. 20 - Hutchins Company had 200,000 shares of common...Ch. 20 - Prob. 20.2MCCh. 20 - Prob. 20.3MCCh. 20 - Prob. 20.4MCCh. 20 - Refer to the information about Hutchins Company in...Ch. 20 - Prob. 20.6MCCh. 20 - Prob. 20.1BECh. 20 - Prob. 20.2BECh. 20 - Computing Income for Basic EPS. Russo Watches, Ltd...Ch. 20 - Prob. 20.4BECh. 20 - Compute Weighted-Average Number of Shares...Ch. 20 - Compute Weighted-Average Number of Shares...Ch. 20 - Prob. 20.7BECh. 20 - Prob. 20.8BECh. 20 - Prob. 20.9BECh. 20 - Prob. 20.10BECh. 20 - Prob. 20.11BECh. 20 - Computing Basic and Diluted EPS, Options. Nicks...Ch. 20 - Computing Diluted EPS, Convertible Debt. Axelon...Ch. 20 - Computing Basic and Diluted EPS, Preferred Stock....Ch. 20 - Computing Weighted-Average Number of Common Shares...Ch. 20 - Prob. 20.3ECh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.5ECh. 20 - Computing Basic and Diluted EPS, Convertible Bonds...Ch. 20 - Computing Basic and Diluted EPS, Convertible Bonds...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Options,...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.12ECh. 20 - Prob. 20.1PCh. 20 - Prob. 20.2PCh. 20 - Computing Basic and Diluted EPS. Convertible...Ch. 20 - Prob. 20.4PCh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.7PCh. 20 - Prob. 20.8PCh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 1JCCh. 20 - Financial Statement Analysis Case 1: EPS Analysis...Ch. 20 - Prob. 1SSCCh. 20 - Basis for Conclusions Case 1: Antidilutive...Ch. 20 - Basis for Conclusions Case 2: Treasury Stock...
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Similar questions
- What are the distinctive features of ToyJoys income statement? Its statement of retained earnings? Its balance sheet?arrow_forward(a) Why is the EPS (earnings per share) figure useful to the users of general purpose financial reports (GPFR)? Give reasons to support your answer.arrow_forwardWhat is the difference between a multiple-step and a single-step format of the earnings statement? Which format is the most useful for financial analyst?arrow_forward
- Why is the income statement called a dynamic financial statement?arrow_forwardWhich of the following financial statements would be most useful if an analyst wants to know the profitability of a company? A. balance sheet B. statement of cash flows C. statement of retained earnings D. income statementarrow_forwardWhat is the basic objective in looking at trends in financial ratios and other data?arrow_forward
- How is the use of financial statement ratios?arrow_forwardWhat are common-size financial statements and how are they used? What item is the key figure (that is, 100 percent) in a common-size income statement? A common-size balance sheetarrow_forwardFor measuring the financial risk in the organization, we can use? Select one: a. Cash flows Ratio b. Balance sheet ratios c. Earnings of the company d. All options providedarrow_forward
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