22207 Study Guide - Dependent And Independent Variables, Triple Bottom Line, Cash Flow

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turquoisejellyfish638

30 Jul 2015

School

UTS

Department

Business – Accounting

Course

22207

Professor

All

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Document Summary

Topic 1 owners equity. Oversubscription: more shares subscribed for than are available to be sold. Let"s say 100 shares were released for per share with on application and. 130 share applications were received. The company has 2 options in this situation: Assume that 100,000 shares are issued with a call of 0. 60. However 2,000 shares did not pay the call. They were then sold at a 20% discount. Cash (98,000 shares x 0. 6) Ordinary shares (2,000 x 2. 10) Assume a company with 1,000,000 shares declares a sh. 05 per share dividend on 3 november. The dividend is payable on 30 november. Share dividends: a share dividend is a distribution of a company"s ordinary share to existing shareholder. Assume a company declares a 0. 15 per share dividend on 1 june to be distributed immediately. On 1 june the company has 100,000 shares on issue and the shares are currently trading at per share. Cash dividends on preferred share.

Related Questions

Do you agree or disagree with the following post belowfrom a classmate? Please exaplain with cited sources in the bodytexts and reference. Thank you!

Issuing common stock helps a corporation raise money. Thatcapital can then be used in a number of ways to help the businessgrow, such as to acquire another company, pay debts or to simplyhave access to more cash for general corporate reasons. Companiesmust decide, however, whether issuing common stock is really worthit. Issuing additional shares into the financial markets dilutesthe holding of existing shareholders and reduce their ownership inthe corporation.

Pros

Issuing common stock in the financial markets is an alternativeto issuing debt. Rather than adding more debt to a company'sbalance sheet, which is a financial statement, and budgeting forthe servicing of debt, a company can take a less expensive routeand issue common stock. With stock, an organization does not needto make obligatory interest payments to investor and instead canmake discretionary dividend payments when it has extra cash.

Cons

By selling additional common shares into the financial markets,a company is increasing the number of outstanding shares. When thenew shares enter the market, they dilute the ownership of existingshareholders, according to " The Global issues blog and FinancialAccounting book 9th ed, Pearson." One of the perks of being acommon shareholder is the right to vote on important companydevelopments. Once a greater number of common stocks are sold inthe market, an existing shareholder's ownership stake and votinginfluence diminish. Companies sometimes avoid issuing more commonstock as a courtesy to existing shareholders.

Reference:

The GlobalIssuesBlog,8 Big Advantages and Disadvantages ofcommon Stocks, retrieved 03 April 2017 fromhttp://connectusfund.org/8-big-advantages-and-disadvantages-of-common-stocks

Harrison, W. T.,Horngren, C. T. & Thomas, C. W. (2013).Financial Accounting (9^th ed.) Upper Saddle River, NJ:Pearson Education, In

22207 Study Guide - Dependent And Independent Variables, Triple Bottom Line, Cash Flow

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