You are an analyst for Lavish Wealth Management. One of the companies you follow is Antediluvian Industries. One of your clients has become concerned about a downward trend in Antediluvian's market price despite an upward trend in earnings per share. To assist in your explanation to your dubious client, you have created a Tableau Dashboard depicting the trend in EPS, the return on shareholders' equity, and various of their determinants. Return on Shareholders' Equity Avg. SE ROE $1,500,000 Earnings-Price Ratio 12.0% EPS Earnings-Price Ratio 40.0% 10.0% -$1.50 30.0% $1,000,000 8.0% -$1.00 Return on Equity Average Sharehoklers' Equity Earnings-Price Ratio 6.0% EPS 20.0% $500,000 4.0% -$0.50 10.0% 2.0% 0.0% SO $0.00 2014 2015 2016 2017 2018 2019 2020 2021 Dividends Net income Shares, Net Income, & Dividends 0.0% 2014 2015 2016 2017 2018 2019 2020 2021 EPS Price-Earnings Ratio Price-Earnings Ratio Dividends Net income Shares, Net Income, & Dividends $250.000 Price-Earnings Ratio EPS Price-Earnings Ratio Shares 20 -150.000 $200,000+ -$1.50 15 $150,000+ 7-100,000 Shares $1.00 Price-Earnings Ratio EPS $100,000+ 50.000 $0.50 $50,000 SO 0 $0.00 2014 2015 2016 2017 2018 2019 2020 2021 2014 2015 2016 2017 2018 2019 2020 2021 # +ableau K Drawing from the data available ($ in 000s, except EPS), asses the following: Drawing from the data available ($ in 000s, except EPS), asses the following: Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 What was Antediluvian's rate of return on equity in 2016 and in 2021? O 16.6% in 2016 and 40.2% in 2021 O5.5% in 2016 and 10.3% in 2021 15% in 2016 and 40 % in 2021 How would you describe the trend in the company's rate of return on equity during the most recent eight years? OBeginning five years ago, the company's rate of return on equity has experienced a somewhat steady decline, essentially corresponding to a decline in shareholders' equity. Beginning five years ago, the company's rate of return on equity has maintained a somewhat steady growth rate, essentially corresponding to decline in shareholders' equity. O Beginning five years ago, the company's rate of return on equity has maintained a somewhat steady growth rate, essentially corresponding to an increase in net income. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Which of the following does not characterize the trend in the company's earnings per share during the most recent five years? OEPS is increasing despite worsening net income as a result of the number of shares declining by about one-third. The company's EPS has maintained a steady growth rate, partially explaining an increase in the earnings price ratio. The company's EPS is trending upward essentially corresponding to an increase in earnings over the same period of time. How might you explain to your client why the market price of Antediluvian Industries' stock is declining despite an upward trend in earnings per share over the past five years? OEPS is increasing because earnings are declining at a slower rate than the decrease in the number of shares, and the declining price-earnings ratio indicates that investors expect lower earnings in the future. OEPS is increasing, not due to increasing net income, but instead due to a rapid decrease in the number of shares. O The declining price-earnings ratio indicates that investors expect higher earnings in the future, and that expectation is reflected in lower current stock prices. What does the Dashboard suggest about Antediluvian Industries? Antediluvian Industries is a new company whose opportunities for growth are apparent from the rising trends in return on equity, earnings per share, and earnings-price ratio. The company's management believes that share buybacks will result in a more realistic investment base, improving chances for future income growth. The company's opportunities for reinvesting its earnings and growing have peaked resulting in management concluding that shareholders are better off receiving funds in the form of higher dividend payouts and share buybacks than having earnings reinvested on their behalf. What might account for the change in shareholders' equity observed beginning five years ago? O Antediluvian Industries is reinvesting a lower amount of its earnings each year and is buying back a large number of its outstanding shares O Antediluvian Industries' retained earnings is decreasing and the company's paid-in capital is decreasing. The company's dividends are increasing, net income is decreasing, and the number of outstanding shares is rising