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Essay / Research Paper Abstract
This 5 page paper examines the concept. The paper concludes that , even if the EPS figure is fully understood, it must be examined in light of many other variables.
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5 pages (~225 words per page)
File: RT13_SA840eps.rtf
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Unformatted sample text from the term paper:
of assessing stocks is insufficient. In part, there is disagreement in respect to the value of focusing on earnings per share. There also had been problems in comparing the way
that earnings per share is calculated in the United States as opposed to companies abroad. First, what is "earnings per share"? Earnings per share is calculated and the resultant
figure is one that many utilize to determine how a stock is doing. In order to perform the calculation, one must take the net earnings of a firm and divide
it by the average number of outstanding shares (Little & Rhodes, 2004). While a straightforward calculation, its ramifications are anything but simple. In fact, relying too heavily on earnings per
share to value a company can be detrimental. For the most part, it is na?ve to simply look at one figure that is reported in media and accept it as
a valid indicator of what to expect. A bit of history may help a student shed light on this subject. In 1994, the International Accounting Standards Committee decided that
earnings per share figures should be published based on net profits or losses for the period in question ("IASC steering committee issues draft statement on earnings per share," 1994). When
deciding that the earnings per share figure was desirable and meaningful, the committee rejected the use of normalized earnings, where the effect of income and expenses would be excluded ("IASC
steering committee issues draft statement on earnings per share," 1994). For all intents and purposes, the use of the earnings per share figure seemed to be a good thing. Still,
while earnings per share figures were reported and well utilized in the United States, there were problems internationally. Not all nations would calculate earnings per share quite the same way
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