Which one of the following statements about earnings per share (EPS) is correct? Earnings per share (EPS) is the best way to compare the performance of different companies. The EPS ratio is important because it signals the ability of the company to pay future dividends, which investors factor into the stock price. EPS, in its basic form, is calculated by dividing net income by the average number of common shares issued. Earnings per share (EPS) is generally reported in the balance sheet under stockholders' equity