Here are earnings per share for two companies by quarter from the first quarter

Question

Here are earnings per share for two companies by quarter from the first quarter of 2009 through the second quarter of 2012. Forecast earnings per share for the rest of 2012 and 2013. Use exponential smoothing to forecast the third period of 2012, and the time series decomposition method to forecast the last two quarters of 2012 and all four quarters of 2013. (t is much easier to solve this problem on a computer spreadsheet so you can see what is happening.) EARNINGS PERS COMPANY OMPANY B 2009 0.26 0.23 1.21 2.04 0.29 2010 0.24 0.45 2011 -0.23 (loss) -0.93 (loss) 0.40 -1.61 (loss) 0.27 0.47 2012 a. For the exponential smoothing method choose the frst quarter of 2009 as the beginning forecast Make two forecasts: one with a " 0,20 and one uith a # 0.30. (Negative values should be Make two forecasts onel with qelo2o and onel wihl al o30 (Negative values should be indicated by a mnus sign. Round your answers tes decimal places,)

Explanation / Answer

1 Exponential Smoothing Forecasts, QTR Company A Company B a=.20 a=.30 a=.20 a=.30 2009 1 1.16 1.16 0.16 0.16 2 1.40 1.52 0.18 0.19 3 1.35 1.41 0.19 0.20 4 1.32 1.35 0.22 0.24 2010 1 1.38 1.43 0.22 0.24 2 1.51 1.61 0.24 0.27 3 1.45 1.49 0.26 0.29 4 1.22 1.13 0.30 0.34 2011 1 1.03 0.88 0.30 0.33 2 0.78 0.54 0.33 0.37 3 0.44 0.10 0.36 0.39 4 0.43 0.19 0.38 0.42 2012 1 0.02 -0.35 0.36 0.37 2 0.09 -0.14 0.38 0.40 MAD

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