AFM391 Chapter Notes - Chapter 15: Common Stock, Capital Structure, Financial Instrument

41 views2 pages

lemonbeetle804

16 Dec 2018

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM391

Professor

Sasan Saiy

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Earnings per share (eps): measures each ordinary share"s interest in a company"s earnings. Simple capital structures: a capital structure that does not include potentially dilutive securities. Complex capital structures: a capital structure that includes potentially dilutive securities. Basic eps: an indicator of profitability that measures how much of the company"s earnings are attributable to each ordinary share. Basic eps = ni available to common sharehol ders / weighted avg # common shares. Net income available to ordinary (common) shareholders: the company"s net income less dividends on preferred shares . Dividends on preferred shares: are deducted from net income available to ordinary shareholders according to the type of preferred share. C umulative dividends are deducted at the stated rate for the current year, without considering dividends in arrears (these would have already been deducted in prior years). Non -cumulative dividends are only deducted when declared in the amount declared.

Related Questions

Hope corp had 900,000 net income in 2018. The tax rate is 40%.220,0000 shares of common stock outstanding throughout 2018.

Hope corp had the following potentially dilutive securities.

-There are 30,000 options to buy common stock at 40 a shareoutstanding. The market price of the common stock averaged 50during 2018.

. During 2018, there were 40,000 shares of Cumulativeconvertible 7% preferred stock outstanding. The preferred is $100par, pays $3.50 a year dividend, and is convertible into threeshares of common stock.

-Hope Corp issued $1,800,000 of 8% convertible bonds at facevalue during 2017. Each $1,000 bond is convertible into 30 sharesof common stock.

Requirements:

Compute diluted earnings per share for 2018. Completethe schedule and show all computations.

Security Net Income Adjustment Adjusted Net IncomeShares Adjustment Adjusted Shares EPS

emeraldwombat313

Consider the following information taken from the shareholders' equity section:

	(dollar amounts in thousands)
	2018	2017
Preferred shares	$ 1,000	$ 1,000
Common shares, 258,052,356 and 274,001,656 shares issued and outstanding in 2018 and 2017, respectively	3,343	3,310
Contributed surplusâcommon shares	766,382	596,239
Retained earnings	2,192,674	2,424,403
Accumulated other comprehensive (loss) income	(206,662)	58,653
Total shareholdersâ equity	$2,756,737	$3,083,605

Additional Information (all numbers in thousands other than per share information):		2018
Weighted average common shares outstanding		260,000
Price per share at year-end		$105.45
Net income		$1,358,950
Preferred dividends		$100,000
Common dividends		$213,440
Common dividends per share		$.82
Share repurchases		$834,975

Required:

1. Calculate the following for 2018 (Note: Round answers to two decimal places):

Shareholder Payout:
Dividend yield		%
Dividend payout		%
Total payout		%
Share repurchase payout		%
Shareholder Profitability:
Return on common equity		%
EPS	$	per share

beigehornet974

At the end of 2017, Jeffco Inc. had the following equity accounts and balances:

Common shares, no par (175,000 shares issued and outstanding)	$1,926,400
Retained earnings	310,000

During 2018, Jeffco engaged in the following transactions involving its equity accounts:

Issued 8,000 common shares for $35 per share.

Issued 1,000 shares of 9%, $120 stated value preferred shares at $125 per share.

Declared and paid cash dividends of $15,000.

Repurchased and cancelled 500 common shares for $52 per share.

Required:

1. Prepare the journal entries for a through d. For a compound transaction, for those boxes in which no entry is required, leave the box blank.

a. 2018	Cash
	Common Shares
	(Record issue of common shares)
b.	Cash
	Preferred Shares
	Contributed Surplus-Preferred Shares
	(Record issue of preferred shares)
c.	Retained Earnings (or Dividends)
	Cash
	(Record declaration and payment of dividends)
d.	Retained Earnings
	Common Shares
	Cash
	(Record repurchase of common shares)

2. Assume that 2018 net income was $89,600. Prepare a partial statement of financial position showing only the shareholders' equity section at December 31, 2018.

Jeffco, Inc.
Statement of Financial Position (Partial)
December 31, 2018
Shareholders' equity:
Preferred shares, 9%, $120 stated value	$
Common shares, no par
Contributed surplus:
Preferred shares
Total capital stock
Retained earnings
Total shareholders' equity	$

cerisesnake518

AFM391 Chapter Notes - Chapter 15: Common Stock, Capital Structure, Financial Instrument

Document Summary

Get access

Related Documents

AFM391 Chapter 17: Earnings-per-Share

AFM391 Chapter Notes - Chapter 15: Leveraged Buyout, Authorised Capital, Treasury Stock

AFM391 Study Guide - Final Guide: Issued Shares, Stock Split, Weighted Arithmetic Mean

Related Questions