Understanding Income Statements III von Edu Pristine

Dozent des Vortrages Understanding Income Statements III

Edu Pristine

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... items (including discontinued operations, extraordinary items, and unusual or infrequent items) and changes in accounting ...

... "These expenses are considered as part of ordinary business activities but these occur either infrequently or unusual in nature." For example: Gains or losses from the sale ...

... Accounting Treatment. These expenses ...

... Under U.S. GAAP, an extraordinary item is a material transaction/event that is both unusual and infrequent in occurrence." For example: Gains or losses from early retirement of debt ...

... "Implications. Analysts should probe to determine whether a transaction or event is extraordinary." It may be the case that it is a part of business activity, and in such situation it should be considered while forecasting ...

... not yet completed or completed in the current year after ...

... Separate Reporting. Any income or loss (net of taxes) from these operations are reported ...

... "Accounting changes include changes in Accounting principles (retrospectively) v/s Accounting estimates (prospectively) and prior-period adjustments." Accounting principle changes: changes which occurs due to ...

... "Accounting estimate changes:change in management's judgment, usually due to new information. E.g.: Changes in estimated useful life of an asset because new information indicates the asset has a longer or shorter life ...

... "May need to change owners equity as well ...

... B. Requires restatement of all prior period statements presented in the ...

... No restatement of prior ...

... B. Unusual or infrequent items are reported before taxes above net income from continuing operations. C. A change in accounting principle is reported in the income statement net of taxes after extraordinary items and before net income. ...

... prior period financial statements currently presented are ...

... income statement does NOT include: A. Gains/losses from sale of ...

... operating results in the income statement. C. Bypass income statement and reported in other comprehensive ...

... between the operating and non-operating components ...

... (both basic and diluted earnings per share) for both simple and complex capital structures. Describe how earnings per share is calculated and calculate and interpret a ...

... of new denominated post split shares stock of 10 is split into meaning: 2 for 1 split the holder of 100 shares will have 200 shares. "Stock dividends distributed in the form of stocks instead of cash stock dividend is the distribution of additional shares to each shareholder in an amount proportional to their current number of shares. ...

... "Changes in shares outstanding before split/bonus/dividend. Number of shares are adjusted accordingly." Changes in shares ... after split/bonus/dividend ...

... Assuming a simple capital structure what is company´s basic given following information." Net income of 000 "cash dividend to preferred shareholders of 000 "accrued dividends but not paid to its preferred shareholder of 000." ...

... "Spencer company earned net income of 00 000 in 200 and had 100 000 shares of common stock outstanding throughout the year. lso outstanding all year was 00 000 of 10 bond which are convertible into ...

... Company net income is ... cash dividend paid to preferred shareholders is 2 000 accrued dividend but not paid to preferred shareholders is 2 000. Cash dividends to the common shareholders 0 000. Shares outstanding as on 1st Jannuary 2010 are ...

... "A company has ... shares outstanding as on 1st January 2011. On 1st July 2010 the company plans either 200 stock dividend or for 1 stock split recalculation as on 1st December 2010 the number of shares will be ...

... Their effect is calculated from the beginning of the financial year. Fence for calculating. If the number of shares will be ...

... Distinguish between dilutive and antidilutive securities, and describe the implications ...

... EPS is calculated when capital structure contains dilutive securities like stock options, warrants, ...

... by new commonshares that would have been issued at conversion ...

... by the company from the exercise of the options would be used to purchase shares of the company's common stock in the market at the average market price." Hence while calculating diluted EPS for Stock options or warrants. There is no adjustment to earnings available to ...

... "Anti dilutive securities are not considered in the ...

... "For Convertible Bonds. Bonds' after-tax interest expense is not considered an interest expensefor diluted EPS and added earnings ...

... Weighted average share are "Increased by No. of shares that would have been issued on conversion of stock options/warrants." Decreased by no of shares that would have been purchased by hypothecated cash receipt using treasury stock method. "Each potentially dilutive security must be examined ...

... "Denominator. (Weighted average shares + shares on conversion of conv. Pref. shares + shares from conversion of debt + shares issuable from ...

... "Infotech has 10,000 shares outstanding all year. Company has total 1,000 outstanding warrants of $10 per share. Calculate effect of these warrants have on the weighted average number of shares while calculating diluted EPS for following share price combination: A. Year-end price at $12 ...

... price is equal to conversion price, this warrants will have not have any impact on diluted EPS and number of shares to be issued equals to zero. 1,000  (1000 * 10/10) = 0. C. Since the average stock price is lower than conversion price, warrants will not be converted and hence no dilutive ...

... "During 2009 R&M Corporation reported net income was $ 120.5 mn and had $ 85 mn weighted average number of common shares outstanding for the entire year. R&M had 10,000 outstanding preference shares of face value $ 1000 and paying dividend of 8 % end of the year 2009. R&M has 100,000 stock options outstanding at the end of the year, ...

... New equity shares = 100000*100*(25/50) = 5,000,000 ...

... "An analyst has gathered the following information about a company." 50,000 common shares outstanding from the beginning of the year. "Warrants outstanding all years on 50,000 shares, exercisable at $20 per share." Stock is selling at year end for $25. ...

... less than the exercise price of $20. The yearend price per share is not relevant. The denominator consists of only the common stock for basic ...

... "Given the following information, how many shares should be in computing diluted EPS?" 300,000 shares outstanding." 100,000 warrants exercisable at $50 per share." ...

... would be the additional issu ance of shares (5/55) * 100,000 = 9,091. Thus, the denominator will increase by 9,091 shares to 309,09 shares. The question asks for the total, not just the impact of the warrants. ...

... "R&M corporation has a net income of $2 mn for the year ended 31st Dec 2010. The company has average outstanding shares for the year of 500000. It also has 15,000 ... preferred shares, paying a preferred dividend $8 per share. The conversion rate ...

... "The total outstanding shares is: For preferred shares: Convertible bonds: 50000 shares. 500000 + 50000 + 75000 = 6,25,000 shares. Diluted EPS in this case is: ...

... Profit 2,900,000,000.00 36 %. Operating Profit 2,900,000,000.00 36 %. Depreciation, Ammortization 50,000,000.00 1%. EBIT 2,850,000,000.00 36%. Interest 400,000,000.00 5%. EBT 2,450,000,000.00 31%. ...

... financial performance using common-size income statements and financial ratios based ...

... divided by net income. B. Net income divided by net sales ...

... Profit margin, also called return ...

... C. 19.4 "What is the net profit margin for the year ended ...