Financial and Managerial Accounting - With CengageNow
14th Edition
ISBN: 9781337577809
Author: WARREN
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 12, Problem 3ADM
Caterpillar: Earnings per share
Caterpillar Inc. is the world’s leading manufacturer of construction and mining equipment. In addition, Birinyi Associates identified Caterpillar as one of the top five companies to repurchase their 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 3 | Year 2 | Year 1 | |
| Net income Average number of common shares outstanding |
$3,695 617.2 |
$3,789 645.2 |
$5,681 652.6 |
A. Determine the earnings per share for Years 1-3 Caterpillar had no
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.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
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…
Financial statement data for this year and last year for Hanscombe Corp. are as follows:
Current Year
Last Year
Net income
$5,600,500
$4,988,000
Preferred dividends
60,000
60,000
Average number of common shares outstanding
125,000
110,000
Calculate earnings per share for each year. Round your answers to two decimal places.
Current Year
Earnings per Share
Last Year
The company recorded the following indicated earnings per share (EPS) in the last five years
YEAR
EPS
1
10
2
8
3
15
4
16
5
20
You also have data on other similar companies in the real estate sector which are already listed at the local stock exchange
Comparable Firm
Market Price Per share (MPS)
Earnings Per Share (EPS)
A
15
10
B
100
60
C
50
60
D
30
25
Extracts from the books of the company reveal the following
Ordinary Share Capital (Sh. 1.5 Par value)
Sh. 300 Million
Borrowings
Sh. 75 Million
Required:
Estimate the price per share for the company. Clearly state the assumptions taken into consideration in your analysis and computation
Chapter 12 Solutions
Financial and Managerial Accounting - With CengageNow
Ch. 12 - Of two corporations organized at approximately the...Ch. 12 - A stockbroker advises a client to buy preferred...Ch. 12 - A corporation with both preferred stock and common...Ch. 12 - An owner of 2,500 shares of Simmons Company common...Ch. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - A corporation reacquires 60,000 shares of its own...Ch. 12 - The treasury stock in Discussion Question 7 is...Ch. 12 - What are the three classifications of restrictions...Ch. 12 - Prob. 10DQ
Ch. 12 - Dividends per share Zero Calories Company has...Ch. 12 - Entries for issuing stock On January 22, Zentric...Ch. 12 - Entries for cash dividends The declaration,...Ch. 12 - Entries for stock dividends Alpine Energy...Ch. 12 - Entries for treasury stock On May 27, Hydro...Ch. 12 - Reporting stockholders equity Using the following...Ch. 12 - Retained earnings statement Noric Cruises Inc....Ch. 12 - Dividends per share Seventy-Two Inc., a developer...Ch. 12 - Dividends per share Lightfoot Inc., a software...Ch. 12 - Entries for issuing par stock On January 22,...Ch. 12 - Entries for issuing no-par stock On May 15, Helena...Ch. 12 - Issuing stock for assets other than cash On...Ch. 12 - Selected stock transactions Alpha Sounds Corp., an...Ch. 12 - Issuing stock Willow Creek Nursery, with an...Ch. 12 - Prob. 12.8EXCh. 12 - Entries for cash dividends The declaration,...Ch. 12 - Prob. 12.10EXCh. 12 - Prob. 12.11EXCh. 12 - Effect of cash dividend and stock split Indicate...Ch. 12 - Selected dividend transactions, stock split...Ch. 12 - Treasury stock transactions Mystic Lake Inc....Ch. 12 - Prob. 12.15EXCh. 12 - Prob. 12.16EXCh. 12 - Reporting paid-in capital The following accounts...Ch. 12 - Stockholders Equity section of balance sheet The...Ch. 12 - Stockholders Equity section of balance sheet...Ch. 12 - Retained earnings statement Sumter Pumps...Ch. 12 - Prob. 12.21EXCh. 12 - Prob. 12.22EXCh. 12 - Dividends on preferred and common stock Pecan...Ch. 12 - Stock transactions for corporate expansion On...Ch. 12 - Selected stock transactions The following selected...Ch. 12 - Entries for selected corporate transactions Morrow...Ch. 12 - Entries for selected corporate transactions...Ch. 12 - Dividends on preferred and common stock Yosemite...Ch. 12 - Stock transaction for corporate expansion Pulsar...Ch. 12 - Selected stock transactions Diamondback Welding ...Ch. 12 - Entries for selected corporate transactions Nav-Go...Ch. 12 - Prob. 12.5BPRCh. 12 - Selected transactions completed by Equinox...Ch. 12 - Prob. 1ADMCh. 12 - Pacific Gas and Electric: Earnings per share...Ch. 12 - Caterpillar: Earnings per share Caterpillar Inc....Ch. 12 - BBT and Regions Financial: Earnings per share BBT...Ch. 12 - Ethics In Action Tommy Gunn is a division manager...Ch. 12 - Prob. 12.3TIF
Additional Business Textbook Solutions
Find more solutions based on key concepts
What are assets limited as to use and how do they differ from restricted assets?
Accounting For Governmental & Nonprofit Entities
How would the decision to dispose of a segment of operations using a split-off rather than a spin-off impact th...
Advanced Financial Accounting
Preparing Financial Statements from a Trial Balance The following accounts are taken from Equilibrium Riding, I...
Fundamentals Of Financial Accounting
The managers of an organization are responsible for performing several broad functions. They are ______________...
Principles of Accounting Volume 2
Fundamental and Enhancing Characteristics. Identify whether the following items are fundamental characteristics...
Intermediate Accounting
Place the letter of the appropriate accounting cost in Column 2 in the blank next to each decision category in ...
Fundamentals of Cost Accounting
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Analyze Pacific Gas and Electric Company Pacific Gas and Electric Company (PCG) is a large gas and electric utility operating in northern and central California. Three recent years of financial data for Pacific Gas and Electric are as follows (in millions): a. Determine the earnings per share for Years 13. 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.arrow_forwardBrunleigh Corporation earned net income of $200,000 this year. The company began the year with 10,000 shares of common stock and issued 5,000 more on April 1. They issued $7,500 in preferred dividends for the year. What is Brunleigh Corporations weighted average number of shares for the year?arrow_forwardErrol Corporation earned net income of $200,000 this year. The company began the year with 10,000 shares of common stock and issued 5,000 more on April 1. They issued $7,500 in preferred dividends for the year. What is the numerator of the EPS calculation for Errol?arrow_forward
- Given the following year-end information, compute Greenwood Corporations basic and diluted earnings per share. Net income, 15,000 The income tax rate, 30% 4,000 shares of common stock were outstanding the entire year. shares of 10%, 50 par (and issuance price) convertible preferred stock were outstanding the entire year. Dividends of 2,500 were declared on this stock during the year. Each share of preferred stock is convertible into 5 shares of common stock.arrow_forwardRebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the market price per share for Rebert is 51.50. Required: 1. Compute the dollar amount of preferred dividends. 2. Compute the number of common shares. 3. Compute earnings per share. (Note: Round to two decimals.) 4. Compute the price-earnings ratio. (Note: Round to the nearest whole number.)arrow_forwardRebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the dividends paid to common stockholders for last year were 2,600,000 and that the market price per share of common stock is 51.50. Required: 1. Compute the dividends per share. 2. Compute the dividend yield. (Note: Round to two decimal places.) 3. Compute the dividend payout ratio. (Note: Round to two decimal places.)arrow_forward
- Jupiter Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is Jupiter Corporations weighted average number of shares for the year?arrow_forwardBastion Corporation earned net income of $200,000 this year. The company began the year with 10,000 shares of common stock and issued 5,000 more on April 1. They issued $7,500 in preferred dividends for the year. What is the EPS for the year for Bastion?arrow_forwardSolve problem completelyarrow_forward
- Peter Petroleum reported net income totaling $2.1 million for the year. The average number of shares of common stock outstanding during the year totaled 1.05 million. The company’s average P/E multiple is 13.8 based on identified comparable firms. What is Peter’s share price? Group of answer choices $32.23 $27.60 $21.40 $16.16arrow_forwardGusion Corporation has provided the following financial data (in thousands of dollars): Total assets.. Stockholders' equity: Preferred stock, P100 par value, 5%.. Common stock, P2 par value. Additional paid-in capital-common stock Retained earnings....... Year 2 P1,520 P200 P400 P160 P380 Year 1 P1,490 P200 P400 P160 P320 Net income for Year 2 was P110 thousand. Interest expense was P21 thousand. The tax rate was 30%. Dividends on common stock during Year 2 totaled P40 thousand. Dividends on preferred stock totaled P10 thousand. The market price of common stock at the end of Year 2 was P9.15 per share. What is the dividend yield ratio?arrow_forwardROR Corporation's income statement for the year ended December 31, 2024 follows: (Click on the icon to view the income statement.) ROR had 15,000 shares of common stock outstanding during 2024. ROR declared and paid statement. (Round the earnings per share amounts to the nearest cent, $X.XX.) ROR Corporation Income Statement Year Ended December 31, 2024 Earnings per Share of Common Stock (15,000 shares outstanding): Income From Continuing Operations Income From Discontinued Operations Net Income Reference Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Income ROR Corporation Income Statement Year Ended December 31, 2024 Other Income and (Expenses) Income Before Income Taxes Income Tax Expense Income from Continuing Operations Discontinued Operations (less applicable tax) Net Income Print Done $ 175,800 80,000 $ 95,800 58,000 37,800 (17,000) 20,800 4,368 16,432 2,054 18,486arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Stockholders Equity: How to Calculate?; Author: Accounting University;https://www.youtube.com/watch?v=2jZk1T5GIlw;License: Standard Youtube License