ATTESTATION RISK is the risk the CPA may unknowingly fail to modify the report
on management’s assertion. It is composed of inherent risk, control risk, and detection risk.
EARNINGS PER SHARE (EPS) is either: a. Basic EPS is earnings before extraordinary gains and losses, less preferred-share dividends, divided by all common shares outstanding at the most recent fiscal year end. Net income, or earnings, refers to the companys after-tax profits before extraordinary gains or extraordinary losses for the most recent annual period; or, b. Diluted EPS is where the number of shares used in the calculation is increased to account for outstanding dilution such as options, warrants, in-the-money convertibles, etc. EPS, within a firm that has a sustainable competitive advantage, Should show a minimum of 5-years of their EPS trending strongly upward with consistency and without being erratic.
NET WORTH is the difference between Total Liabilities and Total Assets. Minority interest is included here.
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