Exam5 Review - Chapter 11 Ratios and Formulas 1 Estimated...

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Chapter 11 Ratios and Formulas 1. Estimated value of common stock=estimated annual income in the future/investment capitalization rate From current market value: if exceeds (buy), equal (hold), and less than (sell) 2. Estimated value of one share of common stock=estimated annual earnings per share/investment capitalization rate 3. Earnings per share= (net income - preferred dividends) I Average number ofshares of Common shares ofstock outstanding 4. Outstanding stock= issued- treasury stock Financial Statements 1. Discontinued Operations On income statement, report discontinued operations decrease in net income. less the income tax savings 2. Extraordinary Gains and Losses Extraordinary items are reported along with income tax effects (ex. Flood) 3. Accounting Changes Changing in accounting estimates (ex. Estimated life) report current and future periods Changing in accounting principles (ex. Average to FrFO inventory method) repOli past, cun'ent, and future periods 4. Income Taxes Income tax expense-expense on income statement Income tax payable-current liability on the balance sheet i. Debit Income Tax Expense, Credit Income tax payable Statement of Stockholders' Equity 1. Know how accounting transactions aftects stockholders' equity 2. Example issue stock-increase common stock and additional paid-in capital (PIC), and total stockholders' ;equity , 3. Net income increases retained earnings and total stockholders' equity 4. Cash dividends decreases retained earnings and total stockholders' equity
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This note was uploaded on 04/23/2011 for the course ACG 2021 taught by Professor Hornik during the Spring '08 term at University of Central Florida.

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Exam5 Review - Chapter 11 Ratios and Formulas 1 Estimated...

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