Exhibit 13.1
Use the Information Below for the Following Problem(S)
Assume that you are an analyst for the U.S. Autoparts Industry. Consider the following information that you propose to use to obtain an estimate of year 2002 EPS for the U.S. Autoparts Industry:
$\begin{array}{lrr}
\begin{array}{l}
\
\
\text{Personal consumption expenditures}\
\text{Personal consumption expenditures}\ \text{growth}\
\text{Industry Sales per share}\
\text{Industry Operating profit margin}\
\text{Industry Depreciation/Fixed Assets}\
\text{Industry Fixed asset turnover}\
\text{Interest rate}\
\text{Industry Total asset turnover}\
\text{Industry Debt/Total assets}\
\text{Industry Tax rate}\
\end{array}\
\begin{array}{r}
\
\text{Year 2003}\
\hline
\text{\$6,800 Billion}\\\
\$ 525 \\\\\\\\
\end{array}\
\begin{array}{r}
Estimated\
\text{Year 2004}\
\hline\ 1.5 \% \\\
15 \% \
8.25 \% \
3\
6 \% \
1.2 \
45 \% \
36\%
\end{array}\
\end{array}$

In addition a regression analysis indicates the following relationship between growth in industry sales per share and personal consumption expenditures (PCE) growth is
%D Sales per share = 0.02 + 1.5(%DPCE)
-Refer to Exhibit 13.1.Calculate industry EPS for the year 2004.
A) $45.25
B) $36.79
C) $57.25
D) $32.56
E) $48.57

Question

Exhibit 13.1
Use the Information Below for the Following Problem(S)
Assume that you are an analyst for the U.S. Autoparts Industry. Consider the following information that you propose to use to obtain an estimate of year 2002 EPS for the U.S. Autoparts Industry:
 $\begin{array}{lrr}
\begin{array}{l}
\
\
\text{Personal consumption expenditures}\
\text{Personal consumption expenditures}\ \text{growth}\
\text{Industry Sales per share}\
\text{Industry Operating profit margin}\
\text{Industry Depreciation/Fixed Assets}\
\text{Industry Fixed asset turnover}\
\text{Interest rate}\
\text{Industry Total asset turnover}\
\text{Industry Debt/Total assets}\
\text{Industry Tax rate}\
\end{array}\
\begin{array}{r}
\
\text{Year 2003}\
\hline
\text{\$6,800 Billion}\\\
 \$ 525 \\\\\\\\
\end{array}\
\begin{array}{r}
Estimated\
\text{Year 2004}\
\hline\ 1.5 \% \\\
 15 \% \
8.25 \% \
3\
6 \% \
1.2 \
45 \% \
36\%
\end{array}\
\end{array}$
 
In addition a regression analysis indicates the following relationship between growth in industry sales per share and personal consumption expenditures (PCE) growth is
%D Sales per share = 0.02 + 1.5(%DPCE)
-Refer to Exhibit 13.1.Calculate industry EPS for the year 2004.
A) $45.25
B) $36.79
C) $57.25
D) $32.56
E) $48.57

Quizplus · Accepted Answer

To calculate the industry EPS for 2004, first determine the growth in industry sales per share using the regression equation: %Δ Sales per share = 0.02 + 1.5(%ΔPCE). With a 1.5% growth in PCE, %Δ Sales per share = 0.02 + 1.5(1.5%) = 2.27%. Apply this growth to the 2003 industry sales per share of $525 to get the 2004 sales per share. Then, calculate the operating profit using the operating profit margin, subtract interest and taxes, and divide by the number of shares to find EPS. The calculations lead to an EPS of $36.79.

Exhibit 13 In Addition a Regression Analysis Indicates the Following Relationship Between