To determine which of the given options is a profitability measure that uses the number of outstanding shares in the calculation, let's review each option:
A) Dividend yield: Dividend yield is calculated as the annual dividend per share divided by the price per share. It measures the return on investment from dividends but does not directly use the number of outstanding shares in its calculation.
B) Earnings per share (EPS): Earnings per share is calculated as the net income divided by the number of outstanding shares. This measure explicitly uses the number of outstanding shares in its formula. It represents the portion of a company's profit allocated to each outstanding share of common stock.
C) Price per share: The price per share is the market price of one share of stock. It does not involve the number of outstanding shares in its calculation.
D) Capital gains: Capital gains refer to the profit made from selling an asset for more than its purchase price. This measure does not directly use the number of outstanding shares in its calculation.
E) Net income: Net income is the total profit of a company after all expenses and taxes have been deducted. It does not use the number of outstanding shares in its calculation.
Given this analysis, the correct answer is:
B) Earnings per share
