SUGGESTED REFINEMENTS OF PROCEDURES IN DETERMINING EARNINGS PER SHARE.

This article recommends an alternate procedure to provide a statistic for situations where the rates of return on original and additional capital investments vary. Computations of earnings-per-share data should be based on the weighted average number of common shares and common share equivalents outstanding during each period presented. Use of a weighted average is necessary so that the effect of increases or decreases in outstanding shares on earnings-per-share data is related to the portion of the period during which the related consideration affected operations. The importance to the security analyst of estimating future earnings in the analysis of various securities is also recognized by the Securities and Exchange Commission.