Answer:
The importance of Generally Accepted Accounting Principles (GAAP) for Earnings Per Share (EPS) to analysts evaluating companies based on price earnings ratio is reduction of risks of mis-interpretation and avoidance of fraud.
Explanation:
GAAP helps to protect the rights of stakeholders such as Investors.
EPS is key to picking a good stock. It ia derived by calculating a company's net income y its number of outstanding shares.
when the EPS growth rates is 25 per cent and above, it is favorable and suggests a company whose products and services is in strong demand
A company with consistent increase in EPS growth rates especially in recent quarters is a good place to Invest.
earnings growth improves stock success and has tremendous impact on pricing.
For instance, The EPS rating of a comapny was analyzed over a period of three years with extra consideration on recent quarters. The results is a assigned 1 to 99.
if the company has a rating of 90 at this point in time, that the company;s profit growth has exceeded 90 percent of all other traded companies.
