Question

Which of the following statements is true? By comparing earnings per share of a single corporation over time, a stockholder can evaluate the corporation’s relative earnings performance. Earnings per share is an internal measure and is not used by stockholders. Net income is not adjusted when computing earnings per share. The denominator used in computing earnings per share represents the shares of common stock outstanding on the last day of the accounting period.

Answer 1

Answer:

By comparing earnings per share of a single corporation over time, a stockholder can evaluate the corporation’s relative earnings performance.

Explanation:

Remember, earnings per share often makes up part of the financial statement of a corporation. Since a shareholder of a corporation usually has a stake or interest in the company's performance, such comparisons of the earnings per share of a single corporation over time, can enable him or her evaluate the corporation’s relative earnings performance.