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STOCKHOLDERS’ EQUITY SECTION OF THE BALANCE SHEET 1

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Financial Statement Analysis-FIN621
VU
Lesson-40
STOCKHOLDERS' EQUITY SECTION OF THE BALANCE SHEET
Stockholders' equity
Rs.6 preferred stock, Rs.100 par value, callable at 102,
Rs.102, 200,000
Shared authorized
Rs. 12, 000,000
Common stock Rs.5 par value, 5,000,000 shares authorized:
Issued
Rs.10, 000,000
Subscribed
Rs. 4,000,000
Rs. 14,000,000
Additional paid-in-capital:
Preferred
Rs.360, 000
Common (including subscribed shares)
30,800,000
Rs. 31,160,000
Retained earnings
Rs. 2,680,000
Total stockholders' equity
Rs.59, 840,000
I) No of preferred shares issued
= Rs.12, 000,000(total par value) = 120,000 shares
Rs.100 (par value per share)
II) Annual divided requirement on outstanding preferred stock =
120,000 (no of shares) x 6(dividend per share)
= Rs.720, 000
III) Common shares issued and subscribed
= Rs.14, 000,000 (total par value) = 2,800,000 shares.
Rs.5 (par value per share)
IV) Average price per common share received by the business
= 14,000,000(total par value)+ 30,800,000 (additional paid-in-capital)
2,800,000 (shares issued and subscribed)
= 44,800,000 = Rs.16
2,800,000
v)
Amount per common share due from subscribes
= 7,200,000 (subscription receivable)  = Rs.9
800,000 shares subscribed
i.e.
4,000,000 per value of subscribed shares = 800,000
5, par value of share
148
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Financial Statement Analysis-FIN621
VU
v)
Total legal capital = 12,000,000 (preferred) +14,000,000 (common) = Rs.26, 000,000
vii)
Total paid-in-capital = Total legal capital + additional paid-in-capital.
= 26,000,000 + 31,160,000
= 57,160,000
viii)
Book value per common share = Common stock equity
Total common share
= Total stockholders' equity ­ claim of preferred stockholders at callable price
2,800,000
= 59,840,000 ­ (120,000 shares x 102 callable price)
2,800,000
= 59,840,000 ­ 12,240,000
2,800,000
= 47,600,000/2,800,000
= Rs.17
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Table of Contents:
  1. ACCOUNTING & ACCOUNTING PRINCIPLES
  2. Dual Aspect of Transactions
  3. Rules of Debit and Credit
  4. Steps in Accounting Cycle
  5. Preparing Balance Sheet from Trial Balance
  6. Business transactions
  7. Adjusting Entry to record Expenses on Fixed Assets
  8. Preparing Financial Statements
  9. Closing entries in Accounting Cycle
  10. Income Statement
  11. Balance Sheet
  12. Cash Flow Statement
  13. Preparing Cash Flows
  14. Additional Information (AI)
  15. Cash flow from Operating Activities
  16. Operating Activities’ portion of cash flow statement
  17. Cash flow from financing Activities
  18. Notes to Financial Statements
  19. Charging Costs of Inventory to Income Statement
  20. First-in-First - out (FIFO), Last-in-First-Out (LIFO)
  21. Depreciation Accounting Policies
  22. Accelerated-Depreciation method
  23. Auditor’s Report, Opinion, Certificate
  24. Management Discussion & Analyses (MD&A)
  25. TYPES OF BUSINESS ORGANIZATIONS
  26. Incorporation of business
  27. Authorized Share Capital, Issued Share Capital
  28. Book Values of equity, share
  29. SUMMARY
  30. SUMMARY
  31. Analysis of income statement and balance sheet:
  32. COMMON –SIZE AND INDEX ANALYSIS
  33. ANALYSIS BY RATIOS
  34. ACTIVITY RATIOS
  35. Liquidity of Receivables
  36. LEVERAGE, DEBT RATIOS
  37. PROFITABILITY RATIOS
  38. Analysis by Preferred Stockholders
  39. Efficiency of operating cycle, process
  40. STOCKHOLDERS’ EQUITY SECTION OF THE BALANCE SHEET 1
  41. STOCKHOLDERS’ EQUITY SECTION OF THE BALANCE SHEET 2
  42. BALANCE SHEET AND INCOME STATEMENT RATIOS
  43. Financial Consultation Case Study
  44. ANALYSIS OF BALANCE SHEET & INCOME STATEMENT
  45. SUMMARY OF FINDGINS