Your firm, where you are the new Chief Financial Officer (CFO), has had an interesting year. For
Question:
Your firm, where you are the new Chief Financial Officer (CFO), has had an interesting year. For the entire year, you have been operating under the pressure of meeting a major EPS growth challenge. Prior to the start of the year, your Chief Operating Officer (CEO) committed to the investment community that your EPS would move from $2.20 in 2013 to $2.42 in 2014. This was based on target earnings after interest and taxes of $365 million. This is up from actual earnings of $330 million in 2013. The good news is that you are now at mid-year and you have projected that you will either hit the target or beat it by a small amount. Wall Street has been watching closely and really likes what they are seeing. As a result, your stock price has moved from a year-end $22 per share to $30 per share as of June 30th. Nearly all of the increase has occurred over the past two weeks. How can the company maintain its expected EPS?
Step by Step Answer:
Auditing The Art and Science of Assurance Engagements
ISBN: 978-0134613116
14th Canadian edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones