Question

Hogan Inc. reported 2019 earnings per share of $3.26 and had no discontinued operations. In 2020, earnings per share on income from continuing operations was $2.99, and earnings per share on net income was $3.49. Do you consider this trend to be favorable? Why or why not?

Answer 1

This trend is considered unfavorable

Step-by-step explanation:

It is given that the firm earning per share in 2019 was $3.26 and had no discontinued operation. It means that earnings per share on income from continuing operation in 2019 was $3.26. In 2020, earning per share on income from continuing operation was $2.99 only. It evidences that earnings per share on income from continuing operations has declined by $0.47 (from $3.26 to $2.99) and so it (this trend) is considered unfavorable. We need to also understand that in 2020, earning per share on net income of $3.49 indicates that the firm has earned profit on the discontinued operation. It is not a regular activity to consider while analyzing firm profitability trend.