Caterpillar Inc. (CAT) is the world€™s leading manufacturer of construction and mining equipment. In addition, Birinyi Associates identified Caterpillar as one of the top five companies to repurchase its own shares in a recent year.12 Three recent years of earnings and average common shares outstanding data for Caterpillar are as follows (in millions):

a. Determine the earnings per share for Years 1€“3. Caterpillar had no preferred stock outstanding. Round to the nearest cent.
b. Interpret the trend in earnings per share using horizontal analysis for the three years in terms of the change in earnings and average shares outstanding.

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Year 3 $2,102 594.3 Year 2 Year 1 Net income $3,789 645.2 $3,695 617.2 Average number of common shares outstanding