A company recently increased its earnings per share figure by 10%. This means that the company’s:

A company recently increased its earnings per share figure by 10%. This means that the company’s:
A . Share base has widened
B . Ability to pay dividends has improved
C . Market share has risen
D . P/E ratio has increased

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Answer: B

Explanation:

An increase in earnings per share (EPS) indicates improved profitability on a per-share basis. This enhances the company’s ability to distribute dividends to shareholders, assuming a consistent payout ratio.

Widened share base (A): This would typically dilute EPS, not increase it.

Market share (C): Market share is unrelated to EPS; it is about the company’s competitive position.

P/E ratio (D): While EPS affects valuation, a rise in EPS does not guarantee a P/E increase.

Reference: International Certificate in Wealth & Investment Management: Financial ratios and their implications.

EPS as a metric of profitability and dividend-paying capacity.