Seems like no expert want to answer you, so I half pat 6 one try to answer.
Earning per share (EPS) = Profit/ total number of share.
Profit Earning Ratio (PE or PER or whatever they want to call it) = present share price/ EPS.
PE can give you brief idea on how the company doing, but remember, that's based on last year figure. For example, if a company closed their financial year (FY) end at 31/12. Today is 12/11/08. Then the PE is based on FY07 and now is 3rd quarter (3Q) of FY08. If the company doing ok for last year but immediately kena teruk this year, you will still see a beautiful PE but indeed the company might already inside deep trouble. A better judgement can be make base on quarterly result, for example you can see the 1Q, 2Q & 3Q result for your reference.
Also please note that profit & loss account (P&L) or comprehensive income statement (new name only, change soup never change ingredients one) is the easiest one to be manipulated. Try read the P&L with cash flow statement and verify with balance sheet, read the notes to account (that's very important notes, but very boring

). Good luck on your investment, you will pick up over the time.
