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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.

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

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

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

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

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