The Wall Street Journal routinely publishes summaries of corporate quarterly andannual earnings reports in a feature called the "Earnings Digest." A typical "digest" re-port takes the following form:

The letter in parentheses following the company name indicates the exchange on which En-ergy Enterprises' stock is traded - in this case, the American Stock Exchange.

Instructions Answer these questions:

(a) How was the loss on the electrical equipment reported on the income statement? Wasit reported in the third quarter of 1997? How can you tell?

(b) Why did The Wall Street Joumal list the extraordinary item separately?

(c) What is the extraordinary item? Was it included in income for the third quarter? Howcan you tell?

(d) Did Energy Enterprises have an operating loss in any quarter of 1997? Of 1998? Howdo you know?

(e) Approximately how many shares of stock were outstanding in 1998? Did the numberof outstanding shares change from July 31, 1997 to July 31, 1998?

(f) As an investor, what numbers should you use to determine Energy Enterprises' profitmargin ratio? Calculate the 9-month profit margin ratio for 1997 and 1998 that youconsider most useful. Explain your decision.

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Revenues Net income ENERGY ENTERPRISES (A) EPS: Net income Revenues Extraordinary item Net income EPS: Net income Quarter ending July 31 1998 $2,049,000,000 97,000,000 1.31 1997 $1,754,000,000 (a) 68,750,000 9 months ending July 31 1998 $5,578,500,000 1997 .93 $5,065,300,000 (b) 1,900,000 102,700,000 (a) 33,250,000 1.39 .45 (a) Includes a net charge of $26,000,000 from loss on the sale of electrical equipment (b) Extraordinary gain on Middle East property expropriation