Question
($ millions) Common Stock Preferred Stock Reinvested Earnings Accumulated Other Comprehensive Income Total Shareholders Equity december 31st , 2015 380 50 1200 550 2180 net
| ($ millions) | Common Stock | Preferred Stock |
|
| |||||||
| december 31st , 2015 | 380 | 50 | 1200 | 550 | 2180 | ||||||
| net income | 750 | 750 | |||||||||
| foreign currency translation loss | (40) | (40) | |||||||||
| OTHER COMPREHENSIVE INOME | 20 | 20 | |||||||||
| TOTAL COMPHREHENSIVE INCOME | 750 | (20) | 730 | ||||||||
| DIVIDENDS | (30) | (30) | |||||||||
| COMMON STOCK ISSUED | 20 | 20
| |||||||||
| PREFERED STOCK ISSUED | 10 | 10 | |||||||||
| DECEMBER 31 , 2016 | 400 | 60 | 1920 | 530 | 2910 |
ZAQ Limited recently reported the following statement of shareholders equity in its most recent annual report. Dividends paid consisted of $25 million in common dividends and $5 million in preference dividends.
Required:
(a) Reformulate the statement to show beginning and ending common shareholders equity, total net transactions with common shareholders and comprehensive income available to common shareholders.
(b) Calculate return on common equity for the most recent financial year.
(c) Gains and losses on derivative instruments used for hedging purposes are recorded either as part of net income or as part of other comprehensive income. Under what circumstances are they recorded as part of net income? Under what circumstances are they recorded as part of other comprehensive income?
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Introduction To Corporate Finance
Authors: William L. Megginson, M.D. Lucey Brian C., Scott J. Smart, Scott B. Smart, Bill Megginson
1st Edition
184480562X, 9781844805624
