Financial Accounting
Financial Accounting
3rd Edition
ISBN: 9780133791129
Author: Jane L. Reimers
Publisher: Pearson Higher Ed
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Textbook Question
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Chapter 11, Problem 1YT

Describe why earnings is such an important number.

Expert Solution & Answer
Check Mark
To determine

Explain the reason for considering earnings as important.

Explanation of Solution

The earnings set as a standard for the investors to evaluate the performance of the company and make the decisions related to investment. The value of the shares increases if company meets the expected earnings and falls if the earnings is reduced. Thus, earnings play an important role in determining the value of the company.

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