Earnings per share is the most commonly cited financial ratio. Indeed, share prices rise and fall in reaction to a company’s earnings per share. The price-earnings ratio is also published in many newspapers’ stock market listings. 

Instructions 

Write a memo explaining why earnings per share and the price earnings ratio are so important to investors. Explain how both ratios are calculated and how they relate to each other. Include in your memo an explanation of how to interpret a high or low price-earnings ratio. Also comment on why you think earnings per share is not required to be reported under ASPE.