Question: Central Sprinkler Corporation manufactures and sells automatic fire sprinkler heads and valves, and it distributes components for automatic sprinkler systems. Selected information from the company's 2014 financial statements show:
In late December 2012, Central Sprinkler bought back 1,237,000 shares of common stock for $11,750,000.
Required: 1. What would EPS have been in 2013 and 2014 had the company not repurchased its common shares? Assume the stock buyback occurred on December 31, 2012, and notice that the company has an October 31 fiscal year-end.
2. Compare the company's profit performance in 2014 to earlier years, and comment on this comparison.
3. The stock buyback isn't the only reason that average common shares declined from 2012 to 2013. What else do you think could have contributed to this decline in average common shares?