Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 13 - Financial Analysis: The Big Picture - Questions - Page 727: 3

Answer

The given date can be summarized as below: Earnings per share - For 2009 - 3.26 dollars per share For 2010 - 2.99 dollars per share

Work Step by Step

We have to take only the normal profits to compare the EPS for two years. Extra ordinary items of one year may not be there in the other year. Hence these will not be taken for comparison. There is a reduction in earnings per share of 0.27 dollars per share from 2009 to 2010. It shows that there is a reduction in profits of the company from 2009 to 2010. The share holders will not like this and the market price of the share may go down.
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