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Compose a 1250 words essay on CASE 2. Needs to be plagiarism free!Common stocks are also investment made by stockholders and is recorded as par value. Retained earnings are the portion that a company
Compose a 1250 words essay on CASE 2. Needs to be plagiarism free!
Common stocks are also investment made by stockholders and is recorded as par value. Retained earnings are the portion that a company keeps once dividends are paid to the preferred stockholders. Large corporations hold a considerable amount of retained earnings. Capital surplus defines values created from stocks issued at a premium over par value. Other stockholder equity shows cumulative gains or losses that cannot be recorded on the income statement (“Financial Statements”, n.d.).
The concept outstanding share is contributed to common stocks. They are owned by public as well as by the company employees. A company calculates its market capitalization by multiplying outstanding shares by their current market price. From this perspective, companies do not have outstanding preferred stock shares. Preferred stocks have characteristics of common stock and a bond. They are traded separately from common stock at a different price. Like a bond, preferred stock has fixed rate payment. These stocks do not have voting right.
Treasury shares are that share that once were outstanding shares, but later bought back by the company and decommissioned. they do not have voting rights and cannot claim dividend. Treasury share are created to boost up earning per share (EPS). This assignment uses Whole Foods Market from NASDAQ and General Electric Company from NYSE. Both companies report treasury shares but do not disclose the reason.
Basic earnings per share (BEPS) implies the amount of a company’s profit that can be allocated to one stock. It is calculated using the formula, BEPS = (Net Income – Preferred dividends) / Weighted average number of common stock. Diluted EPS (DEPS) is calculated in those cases if a company possesses dilutive securities that can be converted into common stock. It is calculated using the formula, DEPS = {(Net income-Preferred dividend)/ Weighted average number of common stock – impact of convertible
