This chapter covers five advanced accounting topics: accounting for earnings per share (EPS) and the price–earnings ratio, foreign currency translations, comprehensive income, fair value accounting, and how to adjust from last-in-first-out (LIFO) to first-in-first-out (FIFO). Although the discussion included is brief (each topic normally has at least a full chapter in an advanced accounting textbook written for accountants), it is meant to provide the reader with a basic understanding of how accountants treat each topic and how they should be interpreted.
Earnings per Share and the Price–Earnings Ratio
EPS is a very important ratio that shows the earnings per ownership unit. This number is so important that it is part ...
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