The International Accounting Standards Board

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Background about the IASB The International Accounting Standards Board (IASB) is an independent body which approves and develops International Financial Reporting Standards (IFRS). They work under the oversight of the IFRS. The IASB was formed back in 2001 to replace the International Accounting Standards Committee. (,2015) The IASB has complete control over of all the methodical matters concerning the IFRS which includes: • Having complete control developing technical areas which then requires consultation with the public and trustees. • Being able to prepare IFRS’s and exposure drafts having followed the process which is given by the constitution. • They also approve issuing and the approval of interpretations which have…show more content…
An equity instrument that is subordinate to all other classes of equity instruments.” (,2015) Potential Ordinary share: “A financial instrument or other contract that may entitle its holder to ordinary shares. (,2015) The importance of Earnings per share figure The price/earnings (PE) ratio is one of the most commonly used ratios which are used by an organisation. The reason for this is because the PE ratio joins with the company’s earnings, which analysts can then interpret whether the shares of the organisation are priced correctly and whether they need a revaluation. The PE ratio can be calculated by firstly dividing the market price of the share and then dividing this by the earnings which the company has generated for that share. (Elliott and Elliott,2007) Market Price of Market share (Elliott and Elliott,2007) Cash generated for share (see appendix to see worked example of a reconciliation of Earnings per share) Factors which can affect the PE ratio The PE ratio reflects how much confidence investors have about what is happening in the industry sector, the economy and also what is happening internationally. The present year of the organisation’s performance can also be taken into consideration. When attempting to interpret the PE ratio, there should be a good amount of information about the organisation and its competitors and detail about the industry the organisation is
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