Athar Company EPS = $0.50			Wagdy Company EPS = $2.00
	Net income = $1,000,000 Avg. # of CShares OS 2,000,000			Net income = $1,000,000 Avg. # of CShares OS 500,000

1. Refer to the EPS information immediately above. Even though Wagdy Company reports __________ EPS, both companies have the same net income. A company with greater EPS __________ indicate greater profitability.

• A. greater; does
• B. greater; does not
• C. lower; does
• D. lower; does not

2. If Athar Company buys back 1 million shares of common stock, then treasury stock would increase, common shares outstanding would ___________, and EPS would change to ______ per share.

• A. increase; $0.33
• B. increase; $1
• C. increase; $2
• D. decrease; $0.33
• E. decrease; $1
• F. decrease; $2

3. An increase in EPS would look _________ to shareholders because their proportionate ownership interest is _______________.

• A. good; increased
• B. good; decreased
• C. bad; increased
• D. bad; decreased