AFM391 Chapter 17: Earnings-per-Share
21 Feb 2017
School
Department
Course
Professor
Document Summary
Eps shows how much a company"s income is attributed to common shares, helping in assessing future dividend payouts and the value of each share. Basic eps looks at actual earnings and the actual number of common shares outstanding (with this number prorated for time outstanding). Diluted eps takes into account financial instruments that might have a negative impact on shareholder returns. Pubic or in-the-process-of-being-public companies are required to report eps on income statement. Eps needs to be disclosed for income from continuing operations, discontinued operations, and net income. Ifrs requires the following: eps amounts be shown for all periods that are presented. If there has been stock dividends or stock splits, all per share amounts of prior period earnings should be restated using the new number of outstanding shares. The restatement should be disclosed in year of restatement. Simple capital structure consist of common shares and preferred shares and/or debt without conversion rights.
