An essential aspect of EPS that’s often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two corporations could generate the same EPS number, but one could do so with less equity (investment) – that company would be more efficient at using its capital to produce income and, all other things being equal, would be a “better” company. Trader or Investor also need to be alert of earnings manipulation that will affect the quality of the earnings number. It is key not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.