Dakota Inc. and Jersey & Company are two large companies that manufacture and se
ID: 2332684 • Letter: D
Question
Dakota Inc. and Jersey & Company are two large companies that manufacture and sell equipment used in the construction, mining, agricultural, and forestry industries. The companies reported the following data (in millions) for two recent years Dakota Net in Average number of common shares outstanding a. Determine the earnings per share In Year 2 and Year 1 for each company, Round your answers to two decimal places. $2,192 $3,775 $1,930 $3,212 594 599 334 363 Year 1 Dakota Jersey b. Evaluate the relative prof ility of the two companies per share per share share per share for Year 1 and Year 2 are higher than However, from Year 1 to Year 2, the earnings per share earnings for both . The slowing world economy contributed to the from Year 1 to Year 2. Overall, appears to be the more profitable companExplanation / Answer
Answer a.
Dakota Inc.:
Year 1:
Earnings per share = Net Income / Average Number of Common Shares Outstanding
Earnings per share = $3,775 / 599
Earnings per share = $6.30
Year 2:
Earnings per share = Net Income / Average Number of Common Shares Outstanding
Earnings per share = $2,192 / 594
Earnings per share = $3.69
Jersey & Company:
Year 1:
Earnings per share = Net Income / Average Number of Common Shares Outstanding
Earnings per share = $3,212 / 363
Earnings per share = $8.85
Year 2:
Earnings per share = Net Income / Average Number of Common Shares Outstanding
Earnings per share = $1,930 / 334
Earnings per share = $5.78
Answer b.
Jersey & Company earnings per share for Year 1 and Year 2 are higher than Dakota Inc. However, from Year 1 to Year 2, the earnings per share for both companies is decreasing. The slowing world economy contributed to the regression from Year 1 to Year 2. Overall, Jersey & Company appears to be more profitable company.
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