Permanent Versus Transitory Earnings Entrust, Inc., is a global provider of security software; it operates in one business segment involving the design, production, and sale of software products for securing digital identities and information. The consolidated statements of operations for a three-year period (all values in thousands) follows. On January 1, Year 1, the Entrust common shares traded at $10.40 per share; by year end Year 3, the shares traded at $3.80 per share. The company's cash flow from operations was $(27,411),$(20,908), and $9,606 for Year 1, Year 2, and Year 3, respectively Calculate the sustainable earnings of Entrust, Inc., for each of the three years. Compare the company's reported net income (loss) with its sustainable earnings. Does Entrust's share price at year-end Year 3 reflect the firm's apparent turn-around? Why or why not? ENTRUST, INC. Consolidated Statements of Operations Year Ended December 31 ($ thousands) Year 3 Year 2 Year 1 Revenues Product Services and maintenance $31,945 $33,624 $47,384 61,662 56,920 58,013 93,607 90,544 105,397 Total revenues Cost of Revenues Product Services and maintenance Amortization of purchased product rights Total cost of revenues Gross profit Operating expense:s Sales and marketing Research and development General and administrative $4,379 $5,571$5,511 29,105 29,825 32,073 1,136 33,868 35,964 38,720 59,739 54,580 66,677 384 568 26,322 34,985 44,128 17,266 22,566 24,151 12,569 3,143 14,840