Sunday, November 12, 2006

And the award for "stating the blatantly obvious" goes to ...

... my FA3 Lesson Notes, for the following passage:

"Regardless of how earnings relate to share price, higher earnings are considered more desirable than lower earnings".

It is worth noting that the same module provides a calculation of the price-earnings ratio (market price / earnings per share). And then, in the following sentence, states:

"To obtain market price, earnings per share is multiplied by the price-earnings ratio".

Hence, my FA3 Lesson Notes also win the award for "circular reasoning". (But thank you for that riveting example of cross-multiplication, which I think was first covered in grade 3.)

2 comments:

Rigmor said...

Wow! Thank you for sharing the enlightenment! here I was thinking that the less i earn the better.... no wonder things sometimes go awfully wrong then!

Trish said...

I know! Narrow escape, huh?

I'd better jot that down. What if it's on the exam? What if I forget?

High earnings - good. Low earnings - bad. What an amazing concept!