Describe how emersons earnings strategy is applied in good

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Reference no: EM13574056

Emerson Electric is engaged in design, manufacture, and sale of a broad range of electrical, electromechanical, and electronic products and systems. The following shows Emerson"s net income and net income before extraordinary items for the past 20 years (in millions):

Year

Net Income

Net Income before Extraordinary Items

Year

Net Income

Net Income before Extraordinary

Item

Year

Net

Income

Net Income

Before Extraordinary

Items










Y1

$201.0

$201.0

Y8

$408.9

$408.9

Y15

$ 708.1

$ 708.1

Y2

237.7

237.7

Y9

467.2

467.2

Y16

788.5

904.4

Y3

273.3

273.3

Y10

528.8

528.8

Y17

907.7

929.0

Y4

300.1

300.1

Y11

588.0

588.0

Y18

1,018.5

1,018.5

Y5

302.9

302.9

Y12

613.2

613.2

Y19

1,121.9

1,121.9

Y6

349.2

349.2

Y13

631.9

631.9

Y20

1,228.6

1,228.6

Y7

401.1

401.1

Y14

662.9

662.9






















Emerson has achieved consistent earnings growth for more than 160 straight quarters (more than 40 years).

Required:

a. What earnings strategy do you think Emerson has applied over the years to maintain its record of earnings growth?

b. Describe the extent you believe Emerson"s earnings record reflects business activities, excellent management, and/or earnings management.

c. Describe how Emerson"s earnings strategy is applied in good years and bad.

d. Identify years where Emerson likely built hidden reserves and the years it probably drew upon hidden reserves.

Reference no: EM13574056

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