Why Weighted Average?

[Atomic_Sheep]

Basic EPS is the amount of income available to common shareholders divided by the weighted average number of common shares outstanding over a period.
(Institute 187)
Institute, CFA. 2016 CFA Level I Volume 3 Financial Reporting and Analysis. CFA Institute, 07/2015. VitalBook file.
The citation provided is a guideline. Please check each citation for accuracy before use.
Why do we use the weighted average number of shares? Aren’t dividends paid once a year so the amount paid in dividends is calculated based on the number of outstanding shares at the time of the payment?

 

[cpk123]

Basic EPS is a number used to compare companies .
This is something that helps make the numbers more comparable. (Say company had a fixed number of shares across time, vs. another company that had stock splits, stock dividends and the like).
So WASO helps rationalize (equalize) the denominator. The Numerator is the Earnings of the company.
And then the Basic EPS becomes comparable.