Home Depot, Inc.'s income statements for 2007, 2008, and 2009 show basic earnings per share of $2.38, $1.34, and $1.58, respectively. Diluted earnings per share figures are slightly lower than these numbers, indicating the impact of potential capital sock activity that could reduce earnings per share for current stockholders.
The company paid cash dividends of $0.90 per share in each of 2007, 2008, and 2009.
a. Why do you think Home Depot is paying out only about 38 percent of 67 percent of its net income to stockholders in the form of cash dividends?
b. If you were an investor in Home Depot's stock, would you be unhappy because your dividends represented such a small percentage of the company's net income?
c. Please use Appendix A below for this question. locate the statement of stockholders' equity and comprehensive income. What treasury stock transactions has Home Depot engaged in during the three-year period presented? Has any additional stock (other than treasury stock) been issued during the period reported? If so, what were the circumstances in which that stock was issued?
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