What is the primary focus of analyzing EPS through accretion/dilution?

The focus of analyzing Earnings Per Share (EPS) through the lens of accretion and dilution centers on the financial impact of the involved firms. When a company acquires another, understanding how this transaction will affect the combined entity's earnings is crucial. Accretion occurs when the acquisition leads to a higher EPS, benefiting shareholders. Conversely, dilution happens when the transaction results in lower EPS, potentially harming shareholder value.

By evaluating how the acquisition affects EPS, stakeholders gain insights into the immediate financial implications of the merger or acquisition, which is essential for making informed decisions and understanding the long-term effects on shareholder wealth. This analysis provides a clear picture of whether the transaction is likely to enhance or diminish the value of the company from a financial standpoint, making it a fundamental aspect of assessing mergers and acquisitions in financial analysis.