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Comment on Post as soon as possible thanks EPS is a result of dividing income available...

Comment on Post as soon as possible thanks

EPS is a result of dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. There are many factors that limit the comparability of these data. The number of shares outstanding for each organization may differ. Also, the assumptions supporting the EPS computation may not reflect the actual actions of the firm. The accounting principles for each firm may also differ and they may not have similar dilutive securities.

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Answer #1

The statements in the question are correct. EPS only gives an indicative figure that how much the company is earning on a single share amount invested. Dilutive EPS gives much more reliable information than Basic EPS.

Basic EPS and Dilutive EPS are used for comparison among companies and these are also used to analyze the market price of the share of respective companies.

Whatever may be the factors, except in exceptional cases, the final figure of EPS shall be taken into consideration for analyzing the company's potential to earn income.

Note: In case of any other clarification, please do comment.

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