Chapter 19, Problem 19.9Q

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share.

Use the following formula to determine EPS:

$\begin{array}{c}\begin{array}{l}\text{Earnings }\\ \text{per share}\end{array}\}\text{ = }\frac{\text{Earnings available to common shareholders}}{\text{Weighted average number of common shares outstanding}}\\ \text{= }\frac{\text{Net income –Preferred dividends}}{\text{Weighted average number of common shares outstanding}}\end{array}$

To distinguish: Basic EPS from diluted EPS