Pacific Gas and Electric: Earnings per share Pacific Gas and Electric Company is

Question

Pacific Gas and Electric: Earnings per share 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 are as follows (in millions): Year 3 $1,450 14 468 Year 1 $830 14 424 Year 2 Net income Preferred dividends Average number of common shares outstanding a. Determine the earnings per share for Years 1-3. Round your answers to two decimal places $828 14 Year 3 Year 2 Year 1 EPS 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

Explanation / Answer

Particulars Year 3 Year 2 Year 1 Net Income $1,450.00 $828.00 $830.00 Preferred Dividend 14 14 14 Earnings available for equity $1,436.00 $814.00 $816.00 Common Shares outstanding 468 444 424 A EPS $3.07 $1.83 $1.92 B Absoulte in Earnings for Equity $622.00 ($2.00) % Change in Earnings for Equity 76.41% -0.25% % Change in EPS 67.37% -4.74% % Change in Common stock 5.41% 4.72% Remarks 2 1 1 Earnings for equity have been reduced by .25%, whereas decrease in EPS is 4.74% owing to increase in outstanding common stock by 4.72% 2 Earnings for equity have been increased by 76.41%, whereas increase in EPS is 67.37% owing to increase in outstanding common stock by 5.41%

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