Stamford Case

SUGGESTED EPS FOR THE COMPANY

The EPS that best reflects the company’s first quarter’s operating results amounts to $0.47. The chief financial officer, Bill Lawrence, calculates and estimates this preliminary figure quarterly. This preliminary EPS better projects the situation the company faces. Stamford International currently witnesses a decline in  the EPS which causes a  deviation from its reputation as a growth stock. Last year’s EPS amounted to an outstanding $0.52 which contributed to Stamford International’s positive reputation as a growth stock. Unfortunately with recent events, Stamford International faces a downturn in its economic stance. Due to damages in inventories and the need to recognize costs, Stamford International’s EPS deflates to $0.47.

REPORTED EPS FOR THE CEO'S

The EPS figure Stamford International’s CEO chooses to report amounts to $0.60. This EPS figure holds a lot of importance to the CEO. The number reflects Stamford International’s growth. Security analysts have predicted the growth stock to have an EPS of $0.60. The company’s, specifically the CEO’s, main priority results to having a higher EPS and following through with analyst’s predictions. Furthermore, Stamford International’s goal to fulfill its reputation as a growth stock attributes to this number. By complying to these goals and priorities, Stamford International stays appealable to the market and receives a favorable reaction from the public. A decline in the EPS causes a decline in the price-to-earnings ratio and ultimately Stamford International loses its recent business negotiations with Apex and Contrelli. By issuing a deflated EPS, Stamford International loses its reputation and the trust of many investors.

DIFFERING GOALS OF MANAGEMENT AND CEO

The differences between the two EPS figures arise from the pressures the two parties face from the market, the company, the board of directors, employees, and the upheld reputation of the company. The two answers differ,...