Answered: Caterpillar Inc. (CAT) is the world's…

Name: Caterpillar Inc. (CAT) is the world's leading manufacturer of construc
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Description: Caterpillar Inc. (CAT) is the world's leading manufacturer of construction and mining equip- ment. In addition, Birinyi Associates identified Caterpillar as one of the top five companies to repurchase its own shares in a recent year. 12 Three recent

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter12: Corporations: Organization, Stock Transactions, And Dividends

Section: Chapter Questions

Problem 4MAD

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Caterpillar Inc. (CAT) is the world's leading manufacturer of construction and mining equip- ment. In addition, Birinyi Associates identified Caterpillar as one of the top five companies to repurchase its own shares in a recent year. 12 Three recent years of earnings and average common shares outstanding data for Caterpillar are as follows (in millions): Year 2 Year 3 Year 1 $2,102 $3,695 $3,789 Net income 594.3 617.2 645.2 Average number of common shares outstanding a. Determine the earnings per share for Years 1-3. Caterpillar had no preferred stock outstand. ing. Round to the nearest cent. b. Interpret the trend in earnings per share using horizontal analysis for the three years in terms of the change in earnings and average shares outstanding. Laura Lorenzetti, "5 Biggest Share Buybacks of 2014," Fortune, May 29, 2014 (online edition). MAD 12-5 Analyze and compare BB&T and Regions Financial BB&T Corporation (BBT) and Regions Financial Corporation (RF) are large regional banking companies. The net income and average common shares outstanding for both companies were reported in recent financial reports as follows (in millions): Obj. 7 REAL WORLD Regions Financial BB&T Net income $2,458 $1,158 Preferred dividends $167 $64 Average number of common shares outstanding 815 1,255 a. Determine the earnings per share for each company. Round to the nearest cent. b. Which company appears more profitable from a total net income perspective? Which company appears more profitable from an earnings-per-share perspective? From a stockholder's perspective, is net income or earnings per share the better C. d. relative earnings measure between the two banks?

to repurchase its own shares in a recent year, 12 Three recent years of earnings and average
common shares outstanding data for Caterpillar are as follows (in millions):
Year 2
Year 3
Year 1
$2,102
$3,695
$3,789
Net income
594.3
617.2
645.2
Average number of common shares outstanding
a. Determine the earnings per share for Years 1-3. Caterpillar had no preferred stock outstand
ing. Round to the nearest cent.
b.
Interpret the trend in earnings per share using horizontal analysis for the thre
years in terms of the change in earnings and average shares outstanding.
1* Laura Lorenzetti, "5 Biggest Share Buybacks of 2014," Fortune, May 29, 2014 (online edition).
MAD 12-5 Analyze and compare BB&T and Regions Financial
BB&T Corporation (BBT) and Regions Financial Corporation (RF) are large regional
banking companies. The net income and average common shares outstanding for both companies
were reported in recent financial reports as follows (in millions):
Obj. 7
Regions
Financial
BB&T
$2,458
$167
$1,158
$64
Net income
Preferred dividends
Average number of common shares outstanding
815
1,255
a. Determine the earnings per share for each company. Round to the nearest cent.
Which company appears more profitable from a total net income perspective?
Which company appears more profitable from an earnings-per-share perspective?
From a stockholder's perspective, is net income or earnings per share the better
b.
с.
d.
relative earnings measure between the two banks?

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