How is earnings per share (EPS) calculated and what restrictions apply?

• A. EPS = (Net Income − Preferred Dividends) / Weighted-average shares outstanding; applies to common stock; exclude dilutive securities.
• B. EPS = Net Income / Weighted-average shares outstanding; includes all outstanding shares.
• C. EPS = (Net Income + Interest) / Shares outstanding; excludes preferred dividends.
• D. EPS = Net Income / Ending shares outstanding; excludes share buybacks.

Answer: (D)