Earnings Per Share Reporting: A Movement Toward International Harmonization

Earnings per share is one of the most widely quoted financial measures used in assessing firm performance. Due to the use of the price-earnings ratio in financial analysis, some countries have established a standard for computation of EPS measures. A paper compares, contrasts and illustrates current EPS reporting practices for 2 countries with actual pronouncements: the US and the UK. These 2 countries were specifically chosen because they represent how current EPS reporting practices can differ on a number of dimensions. In addition, this paper discusses the exposure draft of the Financial Accounting Standards Board as compared to that of the International Accounting Standards Committee, based on a joint project to harmonize the reporting of EPS measures. Final passage of the exposure drafts is expected in mid-1997.