What is the formula to calculate Basic Earnings Per Share (EPS)?

The formula to calculate Basic Earnings Per Share (EPS) is accurately represented by the option that states consolidated profit after tax divided by the weighted average number of ordinary shares. This is because Basic EPS is derived from the net earnings available to ordinary shareholders, which is typically the profit after tax, and then dividing that by the weighted average number of ordinary shares outstanding during the period.

Using the term “weighted average” is important here, as it reflects changes in the number of shares throughout the reporting period due to events such as share issuances or buybacks. This method ensures that EPS presents a true and fair view of how much profit each share has generated over the period, taking into account the varying number of shares outstanding.

The option that specifies consolidated profit is also essential, as it implies that the profits considered are from the total group, including subsidiaries, providing a complete picture of earnings attributable to ordinary shareholders.

Other options may not provide the correct method for calculating Basic EPS or may use inappropriate figures, like earnings before tax or totals without regard for the weighted average, which would not accurately reflect shareholders' returns.