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EPS Pacific Gas and Electric Company is a large gas and electric utility operating in northern and central California. Three recent years of financial data for Pacific Gas and Electric Company are as follows: a. Determine the earnings per share for fiscal Year 3, Year 2, and Year 1. Round to the nearest cent. b. Evaluate the growth in earnings per share for the three years in comparison to the growth in net income for the three years.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 13, Problem 24E
Textbook Problem
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EPS

Pacific Gas and Electric Company is a large gas and electric utility operating in northern and central California. Three recent years of financial data for Pacific Gas and Electric Company are as follows:

Chapter 13, Problem 24E, EPS Pacific Gas and Electric Company is a large gas and electric utility operating in northern and

  1. a. Determine the earnings per share for fiscal Year 3, Year 2, and Year 1. Round to the nearest cent.
  2. b. Evaluate the growth in earnings per share for the three years in comparison to the growth in net income for the three years.

(a)

To determine

Calculate the earnings per share of Company P for Year 3, Year 2, and Year 1.

Explanation of Solution

Earnings per share: Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.

The following formula can be used to calculate earnings per share:

Earnings per shareNet income(loss) – Preferred dividendsAverage number of common shares outstanding

Determine the earnings per share of Company P for Year 3, Year 2, and Year 1.

Earnings per share for Year 3Net income – Preferred dividendsAverage number of common shares outstanding=$888 –$14484 shares$1

(b)

To determine

Evaluate the growth in earnings per share for 3 years in comparison to the growth in net income for the 3 years.

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Financial Accounting
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