a)- Do manager of a firm care more about their EPS than
b) Do vendors of a firm care more about cash flow than EPS? Explain why, just start your explanation with because....
c) Do investors care more about EPS than stock price? Explain why
d) Do banks (or creditors who loaned money to a firm) care more about the firm's working capital or the firm's dividends? Which one and why?
e. Which of the following will raise a firm's stock price: stock repurchases or a new stock issue? Briefly explain why? Start your explanation with because...
Earnings per share is the share of a company’s profit distributed among all shareholders.
Retained earnings are the profit which is held by the company with itself and is not for distribution.
In simple language EPS is important for investors because it helps to find out the financial stability of a firm helps to assess the value of stock. A higher EPS is desired by all the investors because more the EPS more the profit. Investors use EPS to determine wether the value is overvalued or undervalued.
Retained earnings are the profit which are held back by the management of the company for investment purposes. It helps to see how much does the company has to reinvest into its business or invest somewhere else for growth perspective.
for management Retained earnings is more important because it helps to grow the firm. It is a measure of how much a company has for all its investment purposes and how much it has to borrow from the market for making some investment.
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