The Wall Street Journal routinely publishes summaries of corporate quarterly and annual earnings reports in a feature called the "Earnings Digest." A typical "digest" report takes the following form:

The letter in parentheses following the company name indicates the exchange on which Energy Enterprises' stock is traded - in this case, the American Stock Exchange.
\section*{Instructions}
Answer the following questions:

(a) How was the loss on the electrical equipment reported on the income statement? Was it reported in the third quarter of 1994 ? How can you tell?

(b) Why did The Wall Street Journal list the extraordinary item separately?

(c) What is the extraordinary item? Was it included in income for the third quarter? How can you tell?

(d) Did Energy Enterprises have an operating loss in any quarter of 1994? Of 1995? How do you know?

(e) Approximately how many shares of stock were outstanding in 1995? Did the number of outstanding shares change from July 31,1994 , to July 31, 1995?

(f) As an investor, what numbers do you think should be used to determine Energy Enterprises' profit margin percentage (return on sales)? Calculate the 9 -month profit mar-
Prepare irregular items portion of an income statement.
(SO 6) \(\square\)
Evaluate the effects of unusual or irregular items (SO \(5,6,7\) ) gin percentage for 1994 and 1995 that you consider most useful. Explain your decision.

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Energy Enterprises (A) Quarter ending July 31, 1995 1994 Revenues Net income E.P.S.: Net income. $2,049,000,000 97,000,000 1.31 $1,754,000,000 (a) 68,750,000 9 months ending July 31, 1995 $5,578,500,000 1994 .93 $5,065,300,000 Revenues Extraord item (b) 1,900,000 Net income 102,700,000 (a) 33,250,000 E.P.S.: Net income 1.39 .45 (a) Includes a net charge of $26,000,000 from loss on the sale of electrical equipment (b) Extraordinary gain on Middle East property expropriation