ACG Group Essay Example | Topics and Well Written Essays - 500 words

ACG Group - Essay ExampleEarnings per per centum Earnings Per Share (EPS) is one of the commonly used and defines the marrow of money that a business pays per division of its ordinary breed. The ratio is a significant indicator of returns on investors money and influences interest in organizations stock prices. It is computed by subtracting preference share earnings from net income after tax and dividing the remaining amount by the number of ordinary shares for an organization. The EPS is a strong profitability indicator because it is a derivative of profits. Baxter offered EPS of $ 551 while Becton offered EPS of $ 5.69. The risque EPS for Baxter than Becton suggest higher profitability at Baxter than Becton because it the organizations net profits that influence the amount offered in EPS. The difference between values of EPS offered by the two organizations is also too wide to brook occurred by chance and instead indicates differences in profitability. Observed differences in the two EPS rations imply that investing in Baxter is more profitable than investing in Becton (Siddiqui, 2006). Profit rate Profit margin defines the ratio of primitive profits to sales and shows an organizations efficiency in managing its cost of goods sold.