What to know
Identify the rule, formula, or decision criterion before reading the answer choices. CFA Level I distractors often use the right vocabulary with the wrong condition.
Financial Statement Analysis
Earnings per Share practice questions
Earnings per Share is part of CFA Level I Financial Statement Analysis. Financial Statement Analysis questions require careful reading of accounting choices, ratios, cash flow classification, inventories, taxes, leases, and reporting quality. Use this page to review the controlling ideas, then work through 10 questions with answer explanations and common traps.
Review the worked explanations before moving into adaptive practice. The app version can mix this topic with due reviews and weak related concepts.
Practice this topicHow to practice
Work each item under time pressure, then compare your reasoning with the step-by-step explanation and key takeaway.
Review signal
Missed questions should become scheduled reviews when the error comes from a concept gap, formula setup, or answer-choice trap.
Financial Statement Analysis
Earnings per Share
Basic earnings per share is calculated as net income available to common shareholders divided by:
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Earnings per Share
Net income is 1,200, cumulative preferred dividends are 120, and weighted-average common shares are 450. Basic EPS is closest to:
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Earnings per Share
A company had 1,000 shares outstanding all year and issued 200 shares on 1 October. Weighted-average shares outstanding for the year are closest to:
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Earnings per Share
A company has 1,000 average shares and 150 options outstanding with an exercise price of 20. The average market price is 30. Under the treasury stock method, incremental shares are closest to:
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Earnings per Share
Net income is 900, preferred dividends are 60, average common shares are 300, and convertible preferred would add back the 60 dividend and add 30 common shares. Diluted EPS considering this security is closest to:
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Earnings per Share
A convertible bond would increase the diluted EPS numerator by 45 after tax and add 10 shares to the denominator. Basic EPS is 3.80. The bond is most accurately classified as:
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Earnings per Share
When computing diluted EPS, a company with potentially dilutive securities outstanding most likely excludes a convertible security from the diluted calculation when:
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Earnings per Share
Brindle Foods began the year with 200,000 common shares outstanding. On 1 April it issued 48,000 new common shares for cash, and on 1 September it executed a 2-for-1 stock split. The weighted-average number of shares outstanding for the year is closest to:
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Earnings per Share
Tessaro Marine reports net income of USD 3,150,000 and has 1,000,000 weighted-average common shares outstanding and no preferred stock. Throughout the year it had outstanding convertible bonds with a face value of USD 8,000,000 and a 5% annual coupon, convertible in total into 250,000 common shares. The tax rate is 30%. Diluted EPS is closest to:
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Earnings per Share
Loremont Systems reports net income of USD 1,320,000, has 500,000 weighted-average common shares outstanding, and pays no preferred dividends. It has 90,000 employee stock options outstanding all year with an exercise price of USD 32; the average market price of the stock during the year was USD 48. Diluted EPS is closest to:
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