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The Professor
The Professor, Taught at USC Years Ago
Category: Homework
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Experience:  Engineering Degree, Tutoring Experience, USC Faculty (Retired)
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Is a company with $10 earnings per share twice as good as a ...

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Is a company with $10 earnings per share twice as good as a company with $5 earnings per share?
Submitted: 9 years ago.
Category: Homework
Expert:  The Professor replied 9 years ago.
The answer depends on many factors for each company. And each of the following questions will raise further questions depending on the answer.

Are the earnings dependent on rising consumer spending?

Are the earnings "real" or the result of accounting adjustments and practices?

Are the earnings from one-time sales or acquisitions or from ongoing operations?

Are the earnings shown as cash on the books of the corporation or as the alleged market value of financial and real estate assets?

Are the earnings the notional value of derivatives whose actual value may be different than the notional value?

You can see from these questions that "earnings per share", while an indicator of the health of a company, require further analysis.
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Customer: replied 9 years ago.
Reply to The Professor's Post: This question is if in general a company with $10 earnings per share is twice as good as a company with $5 earnings per share or not ?
Expert:  The Professor replied 9 years ago.
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