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.
References:
International Certificate in Wealth & Investment Management: Financial ratios and their implications.
EPS as a metric of profitability and dividend-paying capacity.
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