Attention all CMA Part 2 candidates:
According to information recently received from the ICMA (the entity that administers and grades the CMA exams), the Price/Earnings and Earnings Yield ratios should be calculated using Basic EPS, not Diluted EPS. The Price/Earnings Ratio should be calculated as Market Price Per Common Share / Basic Earnings Per Share. The Earnings Yield ratio is Basic Earnings Per Share / Market Price Per Common Share.
The current HOCK textbook specifies Diluted EPS for both ratios, and that will be changed to Basic EPS in the next update. Answers to questions in the October ExamSuccess update already reflect the use of Basic EPS instead of Diluted EPS. In addition, the HOCK Classroom videos and audios include the revised calculation of the ratios.