Issued by the Committee on Accounting Procedure American Institute of Certified Public Accountants 270 Madison Avenue, New York 16, N. Y.
April, 1958 No. 49
Earnings per Share
1. Statistical presentations of periodic net income (or loss) in terms of earnings per share1 are commonly used in prospectuses, proxy material, and annual reports to shareholders, and in the com-pilation of business earnings statistics for the press, statistical services, and other publications. This bulletin deals with a number of prob-lems arising in the computation and presentation of such statistics.
2. The committee has previously considered certain aspects of this matter2 and now reaffirms its earlier conclusions that:
(a) It is, in many cases, undesirable to give major prominence to a single figure of earnings per share;
(b) Any computation of earnings per share for a given period should be related to the amount designated in the income statement as net income for such period; and
(c) Where material extraordinary charges or credits have been excluded from the determination of net income, the per-share amount of such charges and credits should be reported separately and simultaneously.
3. Not only does the use of a single figure for earnings per share involve the same limitations of usefulness as does a single figure
1 As used herein, the term earnings per share connotes either earnings or losses per share.
2 Accounting Research Bulletin No. 43, Restatement and Revision of Accounting Research letins (1953), Chapter 8. par, 14. Also see Chapter 2(b), par. 4,