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IAS 33 contains a number of requirements on presentation and disclosure.


5.1 Presentation
Basic and diluted EPS should be presented by an entity in the statement of profit or loss and other comprehensive income for each class of ordinary share that has a different right to share in the net profit for the period. The basic and diluted EPS should be presented with equal prominence for all periods presented. (IAS 33: para. 66)
Disclosure must still be made where the EPS figures (basic and/or diluted) are negative (ie a loss per share).

2. 
   Disclosure
   

An entity should disclose the following.

1. 
   The amounts used as the numerators in calculating basic and diluted EPS, and a reconciliation of those amounts to the net profit or loss for the period
   
2. 
   The weighted average number of ordinary shares used as the denominator in calculating basic and diluted EPS, and a reconciliation of these denominators to each other (IAS 33: para. 70)
   

2. 
   Alternative EPS figures
   

An entity may present alternative EPS figures if it wishes. However, IAS 33 lays out certain rules where this takes place.

1. 
   The weighted average number of shares as calculated under IAS 33 must be used.
   
2. 
   A reconciliation must be given if necessary between the component of profit used in the alternative EPS and the line item for profit reported in the statement of profit or loss and other comprehensive income.
   
3. 
   Basic and diluted EPS must be shown with equal prominence. (IAS 33: para. 73)
   

2. 
   Significance of earnings per share
   

Earnings per share (EPS) is one of the most frequently quoted statistics in financial analysis. Because of the widespread use of the price earnings (P/E) ratio as a yardstick for investment decisions, it became increasingly important. It is certainly true that EPS gives a more accurate picture of the actual return to investors than reported profits, which do not show the dilutive effect of share issues.
Reported and forecast EPS can, through the P/E ratio, have a significant effect on a company's share price. Thus, a share price might fall if it looks as if EPS is going to be low.
There are a number of reasons why EPS should not be used to determine the value of a company's shares. IAS 33 concentrates on the denominator of EPS - ie the number of shares. However, it is more difficult to regulate the numerator - earnings. Reported earnings can be affected by a number or factors - choice of accounting policy, asset valuation, taxation issues. Directors who want to present favourable EPS can find ways to boost reported earnings, as happened with Enron.
EPS has also served as a means of assessing the stewardship and management role performed by company directors and managers. Remuneration packages might be linked to EPS growth, thereby increasing the pressure on management to improve EPS. The danger of this, however, is that management effort may go into distorting results to produce a favourable EPS.
It should also be noted that EPS takes no account of other issues that affect whether a company is worth investing in, such as its risk profile and its investment requirements. Nevertheless, the market is sensitive to EPS.
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