Which of the following best describes the basis for earnings per share calculations?

Earnings per share (EPS) is a key financial metric that assesses a company's profitability on a per-share basis, and it's commonly used by investors to understand the company's financial health. The calculation for EPS is fundamentally based on the company's profits after tax, reflecting the profits attributable to ordinary shareholders.

The correct choice, which emphasizes consolidated profits after tax, is significant because it takes into account the net profit of the entire group of companies (if applicable) that a parent company controls, adjusted for any tax impacts. This ensures that shareholders are aware of the total earnings generated by the company and its subsidiaries, providing a clearer picture of the entity’s profitability on a per-share basis.

The other options do not fully capture the appropriate basis for EPS calculation. They either focus too narrowly on specific aspects of profits or fail to consider the comprehensive nature of profits attributable to shareholders in a consolidated view. This is why the choice indicating consolidated profits after tax is the most fitting description for determining earnings per share.