Glen Mount Furniture Company Furniture magnate Carl Thompson distribution capabilities, and yet all the couldn't believe the amount of pressure questions seemed to deal with near term security analysts could put on a firm. earnings performance. He felt that he would The Glen Mount Furniture Company was a eventually have an opportunity to discuss leading manufacturer of fine home the above-mentioned management furnishings and distributed its product initiatives and their impact on the company directly to department stores, independent for the next decade, but current earnings per home furnishing retailers, and a few regional share seemed to gather the attention of the furniture chains. The firm specialized in analysts. bedroom, dining room, and living room Carl knew only too well from past furniture and had three plants in North experience that the earnings performance of Carolina and two in Virginia. Its home office the firm would affect the company's price- was in High Point, North Carolina. earnings ratio and its market value. In a recent presentation to the Atlanta Furthermore, before Carl became president chapter of the Financial Analysts of Glen Mount Furniture Company, he had Federation, Carl Thompson barely had attended a six-week Executive Development taken a bite out of his salad when two Program at the Harvard Business School in analysts from Smith Barney, Harris Upham which he heard a number of professors stress & Co., a stock brokerage firm, began asking the importance of the goal of stockholder questions. They were particularly concerned wealth maximization. He often wondered if about Glen Mount's growth rate in earnings other items were not equally important to the per share. company, such as community service (the Carl was aware that security analysts firm donated $60,000 a year to a local considered earnings performance to be university to help supplement faculty salaries important, but he was somewhat distressed for outstanding professors). He also had a by the fact that this seemed to be their sense of pride that his firm provided overriding concern. It bothered him that the employment to over 500 people in the area. firm had just spent over $10 million to He was not sure that the security analysts develop exciting new product lines, would consider these items to be of particular modernize production facilities, and expand importance. With all of these thoughts in mind, his upcoming meeting with Chief Financial Officer Barbara Bainesworth became particularly important. When Barbara arrived, she had a number of financial documents to review for the purpose of making key decisions. In Figure 1, she showed the earnings performance