The Earnings Per Share Figure Is Likely to Be of Interest

The earnings per share figure is likely to be of interest to shareholders and potential investors because:

A) It calculates the relationship between the share price and the earnings of the entity so that it reflects the market's evaluation of the quality of earnings of the entity.
B) It may be a useful predictor of share price to the extent that earnings are linked to future cash flows and the market reacts to unexpected changes in earnings.
C) The relationship between dividends and earnings provides a useful prediction of the likely future cash flows to shareholders from their investment in the entity.
D) It calculates the return on the capital invested by each shareholder for the period and so is a key benchmark for evaluating the success of the entity.

Correct Answer:

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