Maple Leaf Foods (MLF) is a Canadian manufacturer of meat and baked products that is listed on the Toronto Stock Exchange. On the morning of July 27, 2007, the company issued a press release with its second-quarter financial results:
“Earnings per share from continuing operations before restructuring and other related costs, net of taxes, were $0.13, compared to $0.12 last year, while year-to-date earnings per share on a comparable basis were $0.25 compared to $0.20 last year.”
On July 27 MLF’s stock price opened at $16.20 and closed at $15.94, and dropped further to $14.89 over the next three days.
Because the products made by MLF are widely available on supermarket shelves, the company is well known to the public. In fact, the company is so well known that one of your friends studying liberal arts approaches you and makes the following comments:
“As little as I know about the business world, I’m pretty confident in saying that investors have no idea what they’re doing. Maple Leaf ’s financial statements say that the company is doing pretty well, and the company’s share price tumbles!”
Another one of your friends who majors in finance comments:
“Accounting information is useless to the stock market. Maple Leaf proves my point. The accounting numbers have no relation with share prices!”

Required:
Enlighten your friends by responding to the two comments above.