Earnings Per Share Calculation: Adjusting for Cumulative Preferred Dividends

The correct answer is 'd. annual preferred dividend'.

When computing earnings per share for a simple capital structure, the numerator (earnings) is typically adjusted to deduct the annual preferred dividend. This is because preferred stockholders have a priority claim on the company's earnings and, therefore, the amount of earnings available to common stockholders is reduced by the payment of the preferred dividend.

The adjustment to the numerator is the annual preferred dividend, which represents the amount of dividend that is paid to preferred stockholders on an annual basis. This adjustment is made to reflect the reduction in earnings available to common stockholders.

Therefore, the correct answer is 'd. annual preferred dividend'.