Exam 8: Stock Transactions, Dividends, and EPS

Discuss the impact of stock issuance and repurchase on the balance sheet and income statement.

Cisco Systems Inc. reported the following in its income statement for the year ended July 30, 2016: Net income $10,739 million, basic earnings per share of $2.13 and diluted earnings per share of $2.11. How many additional dilutive shares did Cisco include in the diluted EPS for the year?

Salem, Inc. implemented a restricted stock plan in early 2017. The company transferred 420,000, $1 par shares to the restricted stock plan, that day the stock was trading at $24.83. The restricted shares vest over four years. Use the financial statement effects template below to record the transfer of the shares in 2017 and the vesting in 2018

Retained earnings and accumulated other comprehensive income (AOCI) can be found in the contributed capital section of stockholders' equity.

Which of the following is not a correct statement about noncontrolling interest?

As a shareholder of General Mills, how would you have reacted to the following announcement? How would you expect the stock price to move? How does the company reflect the payment of cash dividends in its financial statements? General Mills (NYSE: GIS) said today that its board of directors has approved an 8 percent dividend increase for General Mills common stock. The new quarterly dividend of $0.33 per share is payable Aug. 1, 2012, to shareholders of record July 10, 2012. The new annualized dividend rate of $1.32 per share represents a yield of roughly 3.4 percent at recent market prices for General Mills shares. "We view dividends and dividend growth as a key component of value creation for shareholders," said General Mills Chairman and Chief Executive Officer Ken Powell. Over the past five years, which was a challenging period for the capital markets overall, General Mills' dividends per share increased at an 11 percent compound annual rate. The company's dividend yield has averaged roughly 3 percent over this same period. General Mills has one of the longest dividend histories in corporate America. The company and its predecessor firm have paid shareholder dividends, without interruption or reduction, for 113 years.

Oil Services Corp. reports the following EPS data in its 2017 annual report (in millions except per share data). a. Recompute basic earnings per share. b. How many weighted average shares were dilutive in 2017?

Buffalo Co. compensates its executives with restricted stock. During 2017, the company granted 14,250 shares of $1 par value restricted common stock that will vest over ten (10) years. The market value of the shares was $9 at the time of the grant. What is the impact of this transaction on additional paid-in capital?

When Kimberly-Clark recently repurchased its stock, this action "downsized" the company. This has the opposite financial statement effects as stock issuance.

During the fiscal year ended January 28, 2017, Abercrombie & Fitch reported the exercise of 2,000 shares at a weighted-average exercise price of $22.87. If Abercrombie's stock was trading at $11.36 on January 27, 2017 and $12.00 on December 30,2016, which of the following details an impact of this transaction on Abercrombie's accounts?

Because diluted EPS include dilutive securities such as convertible securities and employee stock options, it must always be less than or equal to basic EPS.

Kimberly Clark's 2017 Statement of Cash Flows included the following excerpt: Which of Kimberly Clark's financing activities listed above, affected equity accounts? For each item involving equity, specify which equity accounts were affected and the direction of the effect.

Following is the stockholders' equity section of a recent balance sheet for Portlands, Inc.: a. Verify the $302,205 balance for the common stock account. b. What was the average issue price for the common shares issued? c. How many common shares are outstanding as of year-end? d. What was the average cost at which the treasury stock was purchased?

In their 2015 10-K report, eBay reported a stock option grant of 2 million options during the year, the per share fair-value of which was computed as $6.84. If the options have, on average, a four-year vesting period. what expense did the company report in 2015 related to this grant?

Orland Restaurants Inc. reports the following comprehensive income in its 2016 consolidated financial statements ($ in millions): a. In general, why do net earnings and comprehensive income differ? b. How do foreign currency adjustments affect comprehensive income? c. During the year did the U.S. dollar strengthen or weaken vis-à-vis the foreign currencies that Orland uses?