The Wall Street Journal routinely publishes summaries of corporate quarterly and annual earnings reports in a feature called the €œEarnings Digest.€ A typical €œdigest€ report takes the following form.

(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
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.
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 2009? 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 2009? Of 2010? How do you know?
(e) Approximately how many shares of stock were outstanding in 2010? Did the number of outstanding shares change from July 31, 2009 to July 31, 2010?
(f) As an investor, what numbers should you use to determine Energy Enterprises€™ profit margin ratio? Calculate the 9-month profit margin ratio for 2009 and 2010 that you consider most useful. Explain yourdecision.

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ENERGY ENTERPRISES (A) Quarter ending July 31 2010 RevenuCS Net income EPS: Net income $2,049,000,000 97,000,000 1.31 2009 1,754,000,000 (a) 68,750,000 0.93 9 months ending July 31 2010 Revenues Extraordinary item Net income EPS: Net income $5,578,500,000 (b) 1,900,000 102,700,000 1.39 2009 $5,065,300,000 (a) 33,250,000 0.48