In its simplest form EPS (Earnings Per Share) gives an
indication of how much of a company's profit is earned for each
issued share. The ratio is calculated by dividing the Net Profit by
the number of issued shares. The higher the ratio, the better is
the investment.
The EPS ratio is used to quickly differentiate between companies
for investment purposes - as mentioned above the higher the ratio,
the better the investment.
Of course, this is only one measure of the the value of an
investment. There are many other factors to be considered when
making investment decisions, and such decisions should not be made
on the basis of one ratio.