See Table 2.5 E showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco repurchases 1.6 million shares each year from 2016 to 2019. What would be its earnings per share in 2019? (Assume Mydeco pays for the shares using its available cash and that Mydeco earns no interest on its cash balances.) (Select the best choice below.) O A. A repurchase does not impact earnings directly, so any change to EPS will come from a reduction in shares outstanding. 2019 shares outstanding = 56.5 million - 4 x 1.6 million = 50.1 million, EPS = $24.3 million / 50.1 million = $0.49. OB. A repurchase does not impact earnings directly, so any change to EPS will come from an increase in shares outstanding. 2019 shares outstanding = 56.5 million + 4x1.6 million = 54.9 million, EPS = $24.3 million / 54.9 million = $0.44. OC. A repurchase does not impact earnings directly, so any change to EPS will come from a reduction in shares outstanding. 2019 shares outstanding = 56.5 million - 4x 1.6 million = 50.1 million, EPS = $14.8 million/50.1 million = $0.30. OD. A repurchase does not impact earnings directly, so any change to EPS will come from an increase in shares outstanding. 2019 shares outstanding = 56.5 million + 4x1.6 million = 54.9 million, EPS = $14.8 million / 54.9 million = $0.27. 72 219.2 2015-2019 Financial Statement Data and Stock Price Data for Mydeco Corp. (All data as of fiscal year end; in $ millions) Income Statement 2015 2016 2017 2018 Revenue 408.5 361.6 4273 513.3 Cost of Goods Sold (1843) (168.7) (208.1) (242.3) Gross Profit 224.2 192.9 271.0 Sales and Marketing (65.6) (66.2) (83.0) (104.5) Administration (60.5) (60.2) (58.5) (64.7) Depreciation & Amortization (25.4) (26.8) (35.8) (40.1) EBIT 72.7 39.7 41.9 61.7 Interest Income (Expense) (33.2) (34.2) (32.2) (38.9) Pretax Income 39.5 5.5 9.7 22.8 Income Tax (13.8) (1.9) (3.4) (8.0) Net Income 25.7 3.6 6.3 Shares Outstanding (millions) 56.5 56.5 56.5 56.5 Earnings per Share $0.45 $0.06 $0.11 $0.26 Balance Sheet 2015 2016 2017 2018 Assets Cash 48.1 96.8 93.7 Accounts Receivable 90.1 70.8 71.2 78.7 Inventory 35.3 32.4 26.8 32.3 Total Current Assets 173.5 173.4 194.8 204.7 2019 608.8 (296.7) 312.1 (119.1) (79.2) (36.8) 77.0 (39.6) 37.4 (13.1) 14.8 24.3 56.5 $0.43 2019 70-2 106.1 84.4 34.9 225.4 --- 244.5 364.6 247.5 364.6 785.5 309.1 364.6 345.4 364.6 344 3 364.6 934.3 782.6 868.5 914.7 29.8 9.9 39.7 Net Property, Plant & Equipment Goodwill & Intangibles Total Assets Liabilities & Stockholders' Equity Accounts Payable Accrued Compensation Total Current Liabilities Long-Term Debt Total Liabilities Stockholders' Equity Total Liabilities & Stockholders' Equity Statement of Cash Flows Net Income Depreciation & Amortization Change in Accounts Receivable Change in Inventory Change in Pay. & Accrued Comp. Cash from Operations Capital Expenditures Cash from Investing Activ. Dividends Paid 18.4 6.6 25.0 500.7 525.7 256.9 782.6 17.5 7.2 24.7 500.7 525.4 260.1 7855 22.7 6.3 29.0 576.5 605.5 263.0 868.5 26.8 8.1 34.9 603.4 638.3 276.4 914.7 603.4 643.1 291.2 9343 2015 25.7 2019 24.3 25.4 2018 14.8 40.1 (7.5) (5.5) 36.8 3.9 (2.9) 2016 3.6 26.8 19.3 2.9 (0.3) 52.3 (25.7) (25.7) (4.5) 2017 6.3 35.8 -0.4 5.6 4.3 51.6 (96.3) (96.3) (4.5) (5.7) (2.6) 4.8 2.5 54.6 (23.4) (23.4) (4.5) 5.9 57.6 47.8 (73.3) (73.3) (4.5) (392) (39.2) (6.0) Sale (or Purchase) of Stock Debt Issuance (Pay Down) Cash from Financing Activ. Change in Cash Mydeco Stock Price (4.5) 26.7 $7.17 (4.5) 22.1 $4.17 75.8 71.3 26.6 $5.44 26.9 22.4 (3.1) $8.01 12.4 $9.18