Earnings per share (EPS) measures profitability per share. A higher EPS means a company has more earnings available for dividends or reinvestment.
Why is Option B Correct?
An increase in EPS improves the company’s ability to pay dividends, as there are more profits available per share.
Why Not Other Options?
A (Share base widened) → EPS is based on net income, not share count.
C (Market share risen) → Higher EPS does not mean higher revenue or market share.
D (P/E ratio increased) → The P/E ratio depends on share price movements, not just EPS.
???? Reference: CFA Institute (Earnings Analysis), CISI Wealth & Investment Management.
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