7252569-MIdterm-1 (dragged) 45

7252569-MIdterm-1 (dragged) 45 - f. Details of changes...

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Eighth Canadian Edition 15-11 d. Financial reorganizations (Appendix 15B) e. Stock rights and warrants (Chapter 16) f. Issue of convertible debt (Chapter 16) g. Share subscriptions forfeited 39. Accumulated Other Comprehensive Income. Accumulated other comprehensive income results because of treatment of revenues, expenses, gains, and losses that result from nonshareholder transactions, which are not included in the calculation of net income. Presentation and Disclosure 40. Required disclosure, usually through notes to the financial statements, covers information on the terms and rights attached to each equity instrument, and changes in share capital over the fiscal year. The following would normally be disclosed: a. Authorized number of shares b. Existence of unique rights (e.g., dividend preferences) c. Number of shares issued and amounts received d. Whether par value or no par value e. Amount of dividends in arrears
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Unformatted text preview: f. Details of changes during the year g. Restrictions on retained earnings Section 3862 f the Handbook requires additional disclosures of any significant terms and conditions of equity instruments that might affect the amount, timing, and uncertainty of future cash flows. Analyze Shareholders Equity 41. A number of ratios are used to evaluate a companys profitability and long-term solvency. Common ratios used are: a. Rate of return on common shareholders equity : This ratio measures profitability from the common shareholders perspective. This ratio shows how many dollars of net income were earned from each dollar invested by the investors. It is calculated as: net income-preferred dividends/average common shareholders equity. b. Payout ratio : This is the ratio of cash dividends to net income. This is an important ratio to some investors who are looking for good yield on the shares. It is calculated as: cash dividends/net income-preferred dividends....
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