Exam ICWIM Topic 1 Question 7 Discussion
Actual exam question for CISI's ICWIM exam
Question #: 7
Topic #: 1
Question #: 7
Topic #: 1
A company recently increased its earnings per share figure by 10%. This means that the company's:
Suggested Answer: B Vote an answer
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.
* 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.
by Chloe at Jul 24, 2025, 03:28 PM
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