09class07A

09class07A - One can decompose the income statement as...

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One can decompose the income statement as follows: et Income + Other Comprehensive Income = ∆ Net Operating Assets + ∆ Cash and Marketable Securities - ∆ Debt + (Dividends – (∆ Number of Common Shares Outstanding times Ending Price per share)) – Really Dirty Surplus 1
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What is Really Dirty Surplus? eally Dirty Surplus is an adjustment for the fact that accounting often does not use ending price per share but rather some other price per share in recording share issuances and repurchases. If there is only one common stock transaction then Really Dirty Surplus = ∆ Number of Common Shares Outstanding times (Price per share used to record the transaction – Ending Price Per Share). xample: Exercise of stock options uses the exercise price to record the transaction. 2
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Comprehensive Net Income (Net Income + Other Comprehensive Income) can be used/allocated to: A. Increase Net Operating Assets B. Increase Financial Assets C. To Pay Down Debt D. To Pay Dividends plus repurchase of stock (repurchase of stock is often treated as a good alternative to dividends in finance). The term
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09class07A - One can decompose the income statement as...

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