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Thus if the market perceives the declaration of a

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Unformatted text preview: major success stories for companies going public in the last decade. As internet traffic has increased, Google has captured a dominant share in search engine activity. The company’s business model sells advertising to companies, allowing the advertiser to directly target internet users based on search requests. More searches will mean more advertising dollars to Google. Technological changes and a very profitable business model have brightened the future for Google. The stock market has reacted to those heightened expectations for cash flow and profits by driving the stock price higher. ID12–10 a. Both Rhodia and Segway issued equity because of losses that would be evident on the Income Statement. The influx of funds would be evident in the Financing Activities section of the Statement of Cash Flow. The Balance Sheet would also show an immediate increase in the Cash asset, but that would soon be converted to other assets as the company employed the funds. b. When companies issue new stock, the concept of ownership dilution mu...
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