BUS 251 Chapter Notes - Chapter 11: Treasury Stock, Retained Earnings, Share Capital

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 251
• Professor: Anne Mcdonald

Document Summary

Repurchased shares are normally cancelled immediately upon purchase: considered issued but not outstanding, potentially reissued. Legal capital: the amount that a company receives on issuance of shares: must be kept intact (not paid out or returned to sh/e) It takes 3 business days for share trades to be completed. I(cid:374)(cid:272)(cid:396)eases the a(cid:373)ou(cid:374)t of sha(cid:396)eholde(cid:396)s" (cid:272)apital: shareholders have option of keeping new shares or sell them for cash, declared as % of total shares outstanding. How to record the effects of a stock dividend. Step 1: determine the # of new shares being issued as a result of the stock dividend. Step 2: determine the value of the new shares being issued. Increase outstanding shares -> reduces the market price / share. Why would a company split its shares: splitting shares can decrease the share price to make them more affordable for certain investors. Average common sh equity: return on equity ratio.