Stockholders equity common stock

Stockholders equity Common stock. 5 par value Shares authorized, 50.000.000 Shares issued. 34.465.956 172,330.000... 

Equity Financing Typically, the company balance sheet will show the stockholders equity and list the preferred stock, common stock, and retained earnings as in Table 9-23. 

Retained earnings Common-stock equity Total stockholders equity... 

Both common and preferred stocks normally have a par, or nominal, value. In the case of common stock, the market value at the time of issue usually differs from the par value. Stock can be issued either at a premium or at a discount, depending on prevailing economic conditions and the strength of the company. The difference between the actual amount paid and the par value is listed in the stockholders -equity section of the balance sheet, as shown in Table 9-23. The issuance of stock at a premium or a discount is done to protect existing stockholders. 

Stockholders equity is the interest that all stockholders have in a company and is a liability with respect to the company. This category includes preferred and common. stock as well as additional paid-in capital (the amount that stockholders paid above the par value of the stock) and retained earnings. These are earnings from accumulated profit that a company earns and are used for reinvestment in the company. The sum of these items is the. stockholders equity. 

Whether the assets of a company are financed largely by stockholders equity (also called net worth), or largely by debt, or by some combination of the two depends on a number of factors. If sales do not fluctuate, a company is in a good position to pay the fixed interest charges on debt. This is also the case if the revenue from sales is steadily increasing. In this case, any new common stock issued by the company is likely to command a good price, and it also increases the attractiveness of equity financing. 

Total Stockholders Equity. The total stockholders equity is the sum of the preferred stock, common stock, capital surplus, and accumulated retained earnings. 

The stockholders equity is the interest that stockholders have in the business and is the net worth of the company, namely, total assets minus total liabilities. The total stockholders equity is the sum of the preferred stock, common stock capital surplus, and accumulated retained earnings. 

The balance sheet, also called the consolidated balance sheet or statement of consolidated financial condition, is a quantitative summary of a company s financial condition at a specific point in time (at the end of the calendar or fiscal year), including assets, liabilities, and net worth (share owners equity, stockholders equity, or proprietorship). Equity means ownership, generally in the form of common stock or as a holding company. The balance sheet is... 

The second part of the balance sheet in Table 16.3 lists the liabilities and stockholders equity. Current liabilities include all payments that must be made by the company within one year. The total for U.S. Chemicals is 4,153,(XX),0(X). Long-term debts, often in the form of bonds, are due after more than one year from the date of the balance sheet. They total 3,943,(XX),000. Other noncurrent liabilities total 1,754,(XX),(XX) and include pension and other postretirement benefits as well as reserves for any company operations that are discontinued. Total liabilities are 9,850,000,000. We note that liabilities are less than assets by 4,361,(XX),0(X). Thus, by Eq. (16.1), this difference must be the stockholders equity. This equity includes the par value of issued common stock, which totals 1,(XK),000,(X)0. The par value of a share of stock is an arbitrary amount that has no relationship to the market value of the stock, but is used to determine the amount credited to the stock account. If the stock is issued for more than its par value, the excess is credited to the account shown as capital in excess of par value. In Table 16.3, the par value is 1.00 per share but the stock was issued at 4.23 per share. Companies frequently repurchase shares of their common stock, resulting in a reduction of stockholders equity. Because the shares are placed in a treasury, the transaction appears as treasury stock at cost. In Table 16.3, that amount is 3,428,000,000. The other account under stockholders equity is retained earnings, which is the accumulated retained earnings that is increased each year by net income. Tte amount of this entry must be such that Eq. (16.1) is satisfied. This is seen to be tte case in Table 16.3, where the net stockholders equity is 4,361,000,000, giving total liabilities plus stockholders equity as 14,211,000,000, which is equal to total assets. 

A financial analyst looking at a company from a potential common stockholders point of view is hkely to classify preferred stock as debt. In contrast, bondholders and general creditors are likely to regard preferred stock as additional eqmty. Since preferred stock is a hybrid type of security, it may be issued by a company whose management is divided over the question of whether to use equity or debt to finance additional assets. However, preferred stock does have the disadvantage that the dividends are not allowed as a tax-deductible expense. 

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