In sum total stockholders equity begins the year at

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In sum, total stockholders' equity begins the year at $31,640 million (including $77 million relating to miscellaneous accounts that increase total stockholders' equity) and ends fiscal 2010 ith a balance of $47,791 million (including $(46) million relating to miscellaneous accounts that decrease total stockholders' equity) for a net increase of $16,151 million.
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2-15 Module 2 I Overview of Business Activities and Financial Statements RESEARCH INSIGHT Market-to-Book Ratio The market-to-book ratio, also called price-to-book, refers to a company's market value divided by its book (equity) value-it is also computed as stock price per share divided by book value per share. Research shows that the market-to-book ratio exhibits considerable variability over time. Specifically, over the past few decades, the median (50th percentile) market-to-book ratio was less than 1.0 during the mid-1970s, over 2.0 during the mid-1990s, and often between 1.0 and 2.0 dur- ing the 1960s and 1980s. INTERPRETING A STATEMENT OF CASH FLOWS The balance sheet and income statement areprepared using accrual accounting, in which revenues are recognized when earned and expenses when incurred. This means that companies can report income even though no cash isreceived. Cash shortages-due to unexpected cash outlays or when customers refuse to or cannot pay-can create economic hardships for companies and even cause their demise. To assess cash flows, we must assess a company's cash management. Obligations to employ- ees, creditors, and others are usually settled with cash. Illiquid companies (those lacking cash) are at risk of failure. Given the importance of cash management, companies must report a statement of cash flows in addition to the balance sheet, income statement, and statement of equity. The income statement provides information about the economic viability of the company's prod- ucts and services. It tells us whether the company can sellits products and services at prices that cover its costs and provide a reasonable return to lenders and stockholders. On the other hand, the statement of cash flows provides information about the company's ability to generate cash from those same transactions. It tells us from what sources the company has generated its cash (so we can evaluate whether those sources are persistent or transitory) and what it has done with the cash it generated. Statement Format and Data Sources The statement of cash flows is formatted to report cash inflows and cash outflows by the three primary business activities: Cash/lows from operating activities Cash flows from the company's transactions and events that relate to its operations. Cashflows from investing activities Cash flows from acquisitions and divestitures of invest- ments and long-term assets. Cash flows from financing activities Cash flows from issuances of and payments toward borrowings and equity.
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