Pampa Agriculture Supply has one serious local competitor: Spearman Distributors, Inc. Earnings per share (EPS) has consistently increased for both organizations. The management of Pampa is uncertain, however, if the underlying factors driving the increases in EPS are the same across both organizations. Thus, they are interested in financial analysis that goes beyond the surface level. In that regard the following information has been gathered for both Pampa and Spearman: For the Year Ended December 31, 2015 Pampa Spearman Sales Revenue $24,000,000 $25,500,000 Operating Expenses 18,720,000 19,380,000 Earnings before interest and taxes (EBIT) 5,280,000 6,120,000 Interest expense 750,000 1,400,000 Earnings before taxes (EBT) 4,530,000 4,720,000 Tax expense (30% of EBT) 1,359,000 1,416,000 Net income $3,171,000 $3,304,000 Earnings per share (EPS) $2.114 $2.065 For the Year Ended December 31, 2016 Pampa Spearman Sales Revenue $25,920,000 $26,010,000 Operating Expenses 18,196,000 19,768,000 Earnings before interest and taxes (EBIT) 7,724,000 6,242,000 Interest expense 750,000 1,800,000 Earnings before taxes (EBT) 6,974,000 4,442,000 Tax expense (30% of EBT) 2,092,200 1,332,600 Net income $4,881,800 3,109,400 Earnings per share (EPS) $3.255 $3.109 Pampa Spearman By how much did EPS increase from the year of 2015 to the year of 2016? Use EPS from 2015 as the denominator in your computation. Focusing exclusively on EPS, which company improved the most from 2015 to 2016? What are the dangers of focusing on a single, or several, summary measures when evaluating a company? Given your answer to the above question, why do you think a relative handful of summary measures continue to receive extensive attention? What does your answer to the above question reveal about management of companies, financial analysts, and the investing public? Calculate the percentage change in each of the following items from the year of 2015 to the year of 2016. Use 2015 amounts in the denominators of your computations. Pampa Spearman Sales Revenue Operating Expenses Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Tax expense (30% of EBT) Net income Earnings per share (EPS) *18,720 x 1.08 x 0.90 = 18,196 Pampa Spearman What was the weighted average number of common shares outstanding for the year of 2015? For the year of 2016? (Round to the nearest thousand shares.) Looking more broadly at all of the above items, which company improved the most from 2015 to 2016? What primary factor explains the growth in Pampas EPS from 2015 to 2016? Was Pampas management primarily focused on operating, investing or financing activities in 2016? What primary factor explains the growth in Spearmans EPS from 2015 to 2016? Was Spearmans management primarily focused on operating, investing or financing activities in 2016? Which company represents the best building block for constructing a growing, thriving, prosperous economy? In light of the above, how can the monetary policies of a nation - policies intended to promote a growing, thriving, prosperous economy - have an untended, opposite effect? Remember here that the interest rate is a price, and economic agents adjust their behaviors in response to price changes. Depending on how clear and concise your analysis is, as a guideline, addressing the above questions will take between 500 and 1,500 words. This is not an exercise in English literature. The, outline formats, section headings, tables and such are both allowed and encouraged. Prepare your analysis as if it were to be distributed to a committee where you work that has been charged with evaluating this company.