Question

Companies report earnings per share for all of the following except:  

Select one:

a. net income

b. discontinued operations

c. continuing operations

d. operating income

Answer 1

Answer:

d. operating income

Explanation:

Earnings per share is calculated by dividing the company's profit by the outstanding shares of common stock. It is the indicator of the profitability of the firm. If the EPS is higher, then it means the company has higher profit relative to the share price. EPS is calculated on net income, discontinued operations and continuing operations.

The EPS is not reported for operating income. Operating income is the income deducting after operating expenses,  and is shows the profit generated from its operations alone without considering the interest or tax expenses.  So as it isn the final reporting amount, it can't be considered for EPS and for investment decisions.

So the option (d) operating income is the correct option as Companies report earnings per share for all of the following except operating income.