EPS Quiz 1

EPS is a measure of future performance

• True

• False

The P/E ratio indicates the stock market assessment of the future prospects of a company

• True

• False

You can use the EPS and P/E ratio to calculate the share price

• True

• False

Earnings per share is calculated before accounting for the which of the following items?

• Preference dividend for the period

• Ordinary dividend

• Taxation

• Non-controlling interest

A company is required to disclose the current year and prior year EPS figures in the financial statements.

• True

• False

A company has 1,500,000 ordinary shares in issue during the year. Profit after tax and preference dividend was £600,000. What is the basic earnings per share?

• 900.0p

• 40.0p

• 2.5p

• 0.4p

At the start of the year, a company had 1,200,000 £1 equity shares in issue and 350,000 10% preference shares with a nominal value of £1 each. An additional 250,000 shares were issued six months into the year. Profit after tax was £690,000. What is the basic EPS?

• 49.4p

• 57.5p

• 54.7p

• 60.9p