Companies need access to capital at all stages of a business cycle. But before investors contribute capital in exchange for ownership interest, indebtedness, or a combination thereof, analysis of the prospective entity’s ability to generate revenue from continuing operations must occur! So how exactly do investors, creditors, and analysts review ongoing earnings outcomes to then select these potential investments? ASC 260 provides the framework for a required performance metric that these parties can use to compare entities of differing sizes and capital structures: earnings per share (EPS).
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