THE EARNINGS PER SHARE MIRAGE

Abstract

There are two accounting main systems worldwide, and namely the accrual accounting and the cash accounting. Within an accrual accounting, like the Romanian accounting system is, too, there are time intervals between recognizing an expense or an income and the moment when they are paid or cashed. Thus, within such an accounting system is more difficult to get an accurate image of a company’s activity. Also, there are no stock market indicators within the nowadays financial statements from our country and, in this way, the accurate image of the listed companies’ activity is even more distorted. But these companies have usually a large amount of activity, generating huge cash flows that is important to be followed in the most careful way possible. The present paper aims to emphasize the importance of the stock indicators within the financial statements content and, in a particular way, the importance of the “Earnings per Share” position for the financing, investment and operating decisions within a stock listed company.