CFA® Level 1: EPS Calculation | Exam Question Answer

Which figure is not included in EPS calculation?

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Question

Which of the following figures is not explicitly incorporated into the earnings per share (EPS) calculation?

Answers

Explanations

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A. B. C. D. E. F.

D

The EPS figure can be found using two principal equations. The first is illustrated as follows:

{EPS = [(Sales - Fixed Costs - Variable Costs - Interest Expense)(1 - Tax Rate)] / [# of Common Shares Outstanding]}

Additionally, the EPS figure can be found by:

{EPS = [(EBIT - Interest Expense)(1 - Tax Rate) / # of Common Shares Outstanding]} As you can see, all of the choices listed are expressly incorporated into the

EPS calculation.

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