lec11 - Chapter11:ReportingandInterpreting OwnersEquity...

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Slide 1 Chapter 11: Reporting and Interpreting   Owners’ Equity
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Slide 2 Key Learning Objectives Explain the role of stock in the capital structure of a  corporation. Explain the stock, authorized shares, issued shares  and outstanding shares Describe the characteristics of common stock and  analyze transactions affecting common stock Record cash, stock dividends, and stock splits.
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Slide 3  Understanding The Business Simple to become an owner Easy to transfer ownership Provides limited liability Advantages of a corporation
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Slide 4  Ownership of a Corporation Voting (in person or by proxy ). Proportionate distributions of profits. Proportionate distributions of assets in a liquidation. Rights Stockholders’
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Slide 5 V i c e P r e s i d e n t ( P r o d u c t i o n ) V i c e P r e s i d e n t ( M a r k e t i n g ) V i c e P r e s i d e n t ( F i n a n c e ) V i c e P r e s i d e n t ( C o n t r o l l e r ) P r e s i d e n t B o a r d o f D i r e c t o r s I n t e r n a l ( m a n a g e r s ) a n d E x t e r n a l ( n o n - m a n a g e r s ) S t o c k h o l d e r s ( O w n e r s o f v o t i n g s h a r e s ) Elected by shareholders Appointed by directors  Ownership of a Corporation
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Slide 6 Issued shares are authorized shares of stock that have been sold. Unissued shares are authorized shares of stock that never have been sold. Authorized shares are the maximum number of shares of capital stock that can be sold to the public. Authorized, Issued, and Outstanding Shares
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Slide 7 Unissued Shares Treasury Shares Outstanding Shares Issued Shares Treasury shares are issued shares that have been reacquired by the corporation. Outstanding shares are issued shares that are owned by stockholders. Authorized, Issued, and Outstanding Shares
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Slide 8  Earnings Per Share (EPS) Sonic’s income for 2006 is $78,705,000 and the average number of shares outstanding is 86,260,000. Earnings per share is probably the single most widely watched financial ratio. $78,705,000 86,260,000 Shares EPS = = $0.91 per share *If there are preferred dividends, the amount is subtracted from net income.
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lec11 - Chapter11:ReportingandInterpreting OwnersEquity...

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