Dakota Inc and Jersey Company are two large companies that

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 ersey Net income 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 Year 2 Year 1 Year 2 Year 1 $2,192 $3,695 $1,910 $3,222 363 594 599 334 Year 2 Year 1 Dakota ersey b. Evaluate the relative profitability of the two companies. per share per share per share $ per share earnings per share for Year 1 and Year 2 are higher than However, from Year 1 to Year 2, the earnings per share for both companies The slowing world economy contributed to the ? from Year 1 to Year 2, Overall, appears to be the more profitable company

Solution

(a) Determine the Earning Per share Earning Per share = Net Income /Average number of shares outstanding dakota Jersey year2 year 1 year2 year 1 Net Income 2192 3695 1910 3222 Avg shares 594 599 334 363 Earning Per share= Net Income /ave shares 3.69 6.17 5.72 8.88 (b) Evalute the relative profitability of the two companies jersey & Company Earning per share for year1 and year 2 are higher than dakota Inc . How ever , from year 1 to year 2 , the earnings per share for both companies decresed.   the slowing the world economy contributed to the Decresing EPS from year 1 to year 2. Over all Jersey & company appers to be more profitable company.