When computing earnings per share, a) the dividends for cumulative preferred stock are deducted from net income whether or not preferred dividends have been declared. b) an adjustment related to preferred stock dividends is made in the numerator and denominator of the earnings per share formula. c) an adjustment for the preferred dividends is made in the denominator of the earnings per share formula. d) the dividends for cumulative preferred stock are deducted from net income only if the preferred dividends have been declared.
Added by Ruth C.
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- Start with net income. - Deduct any dividends declared on preferred stock (if any). - This gives you the earnings available to common shareholders. Show more…
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