EPS Accounting Report: Development and Problems Earnings per share is the portion of a company’s profit allocated to each outstanding share of common stock. The computation of earnings per share is income minus preferred stock dividends divided by weighted average number of shares of common stock outstanding at the end of the period. Earning per share is considered to be the single most important metric to determine a company’s profitability which is crucial to the decision making of potential
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Common and Preferred Stock How do Corporations raise capital? All of the large corporations could not have grown to their present size without being able to find innovative ways to raise capital to finance ultimate expansion. There are many ways this can be accomplished‚ but this review will take a look at just two ways: the issuance of Preferred Stock and selling of Common Stock. What exactly is a stock‚ anyway? Basically‚ stock is ownership‚ simple as that. Buy a share of APPLE Inc. and acquire
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to be clear that equity instrument i.e common or preferred stocks both are not traded in money market. Similarly‚ we need to keep one thing in mind that money market is a intangible market where we deal over the phone or company‚ we just don’t enter the building of a company. Likewise‚ Capital market refers to the process in which all the financial institutions deals in long term debt in different forms such as debentures‚ public deposits and shares. Long term debt means the duration of maturity is
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PREFERRED STOCK VERSUS COMMON STOCK The primary advantage to an investor of holding preferred stock compared with common stock is that the preferred stock return is somewhat more predictable (more certain). The issuing company will generally make a real effort to try to avoid defaulting on the preferred stock dividend. Since the return to preferred stock is reasonably well defined and since the preferred stockholders precede the common stockholders (the preferred dividends are paid before the
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(GMTC). The questions posed to you are: - 1. In theory‚ to fund an increased dividend payout or a stock buyback‚ a firm might invest less‚ borrow more‚ or issue more stock. Which of those three elements is Gainesboro’s management willing to vary‚ and which elements remain fixed as a matter of the company’s policy? 2. What happens to Gainesboro’s financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a 40% payout is pursued?
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Advantages & Disadvantages of Preferred Stock & Bonds Deciding to invest is a huge financial step‚ not something to be taken lightly. In deciding which method‚ stock or bonds‚ one has to look at all the angels- the advantages and disadvantages‚ both immediate and long term. Preferred stock has many advantages and disadvantages. Unlike debt‚ preferred stock is flexible. Meaning preferred stock can miss annual payments unlike typical debt. Preferred stock not only is more flexible‚ it also helps
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CHAPTER 22 EARNINGS PER SHARE Assignment Assistance Schedule Topic and Estimated Solution Time No. Topic Time* E22-1 Basic EPS calculations: multiple choice 20 E22-2 Calculating fully diluted EPS: multiple choice 40 E22-3 Fully diluted EPS: multiple choice 20 E22-4 Analyze the capital structure; average shares; compute EPS 20 E22-5 Analyze the capital structure; average shares; compute EPS 20 E22-6 Compute EPS for three years; stock dividend and split 15 E22-7 Analyze the capital
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Chapter 19 Share-Based Compensation and Earnings per Share True / False Questions 1. GAAP requires using intrinsic value accounting for employee stock options. True False 2. If previous experience indicates that a material number of stock options will be forfeited before they vest‚ the fair value estimate of the options on the grant date should be adjusted to reflect that expectation. True False 3. Compensation expense must be adjusted during the service period to reflect changes
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VARIABLE-RATE PREFERRED STOCK Preferred stock has frequently been issued in connection with mergers and acquisitions. Often the preferred stock is issued with a conversion feature‚ so in the long run there is a probability it will become common stock capital. Preferred stock allows the acquired firm’s owners a prior claim relative to common stock and reasonably definite dividends while simultaneously giving the acquiring firm a form of leverage without strapping it with the rigid obligations of
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Merck & Co.‚ Inc. and GlaxoSmithKline plc October 20‚ 2014 Concepts A. Common Stock i. Authorized – 5‚ 400‚000‚000 shares ii. Common stock issued – 2‚983‚508‚675 shares iii. In 2007‚ Merck issued 2‚983‚508‚675 shares (one cent par value) Total dollar value: 2‚983‚508‚675*0.01=29‚835‚086.75 iv. Common shares held in treasury – 811‚005‚791 v. Common shares outstanding – 2‚172‚502‚884 (shares issued – treasury shares) vi. December 31‚ 2007 market cap - $125‚157‚891‚147
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