You Are Given the Following Data for Good Company Inc

question 37

Essay

You are given the following data for Good Company Inc. for 2004, 2005, and 2006 (amounts
in thousands). $$\begin{array} { | l | c | c | c | } \hline & 2006 & 2005 & 2004 \\\hline \text { Net Income } & \$ 445 & \$ 402 & \$ 345 \\\hline \begin{array} { l } \text { Average number of common } \\\text { shares outstanding }\end{array} & 135 & 134 & 132 \\\hline \begin{array} { l } \text { Average common shareholder } \\\text { equity }\end{array} & \$ 1,231 & \$ 964 & \$ 735 \\\hline\end{array}$$
a. Calculate ROCE for the three years.
b. Calculate basic EPS for the three years.
c. Interpret your findings for both ROCE and EPS.

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Definitions:

Interest Rates

The cost of borrowing money or the return on investment for savings and loans, usually expressed as a percentage.

Consumption And Investment

The activities of spending on goods and services for current use and investing in assets for future returns.

Capital Goods Industries

Capital goods industries are sectors of the economy that produce machinery, equipment, and supplies used in the manufacturing and production of other goods rather than for direct consumption.

Business Cycle

The fluctuations in economic activity that an economy experiences over a period, ranging from expansions (growth) to recessions (contractions).