Question

the numerator in the earnings per share calculation a. represents only those earnings available to preferred stockholders. b. represents only those earnings available to common stockholders. c. represents earnings available to common and preferred stockholders. d. represents only those earnings available to treasury stockholders.

Answer 1

The numerator in the earnings per share calculation represents earnings available to common stockholders after accounting for preferred stock dividends. Therefore, the correct option is B.

Step-by-step explanation:

The numerator in the earnings per share (EPS) calculation represents earnings that are available to common stockholders after dividends paid to preferred stockholders have been subtracted. EPS is an important financial metric that allows shareholders and potential investors to assess a company's profitability on a per-share basis.

When calculating EPS, the earnings attributable to common stockholders are divided by the number of outstanding common shares, which excludes any shares held as treasury stock since they do not confer ownership or the right to dividends.