Chapter 11- Shareholders' Equity Flashcards
1
Q
Significance of SE
A
- share ownership is very common
- on F.S
- equity financing
- impact of earnings on share valuation
2
Q
Components of SE
A
- share capital
- retained earnings
- accumulated other comprehensive income
- contributed surplus
3
Q
Share Capital
A
- amount received from investors on the initial issuance of a company’s shares
4
Q
Retained Earnings
A
- company’s accumulated earnings that have not been distributed as dividends
5
Q
Accumulated Other Comprehensive Income
A
- includes unrealized gains and loses resulting from revaluations rather than from transactions with third parties
6
Q
Contributed surplus
A
- from sale or repurchase of a company’s shares or from the issuance of stock options
7
Q
Authorized shares
A
how many shares a company is allowed to give out
- private company’s = unlimited
8
Q
Issued and outstanding shares
A
shares that have been sold by the company
9
Q
Treasury shares
A
shares that are repurchased by the company
- public companies, not entitled to dividends
10
Q
Types of shares
A
1, common 2, preferred
- with multiple classes of shares it makes it easier for companies to raise capital
11
Q
IPO- Initial Public Offering
A
first time a company issues shares @ public stock exchange
12
Q
Common Shares
A
- Help grow company
- Typical basic voting
- Not a fixed rate
- right to receive dividends
13
Q
Preferred Shares
A
- usually non-voting
- entitlement to dividends, fixed rate
- before common shares
- they may be: redeemable, retractable, convertible, cumulative, participating
14
Q
Dividends
A
- company must have cash or Retained Earnings to pay dividends
15
Q
Cash dividends
A
entitle shareholders to cash payments and most common type
