Acc 291 Week 3 Reflection
Week Three Reflection
What are five reasons why a company may choose to buy back their own stock? A company will buy back its own stock more a multiple of reason. The company may need to issue shares to its officers and employees under bonus and stock compensation plans. Maybe the company wants to enhance the stock’s market value, by having fewer stocks out in the market the value can go up. A company may be trying to buy another company and in order to finalize the purchase the company may need to promise stocks during the buyout. If the company does not have enough stocks to close the deal it will need to buy back some stocks. A simple reason is buying back stocks has the potential to increase the earnings a share may be worth. The last reason is to avoid a hostile takeover, if a company has many disgruntled investors the company could be on the verge of a takeover so a company will buy back stocks to change the percentage of ownership within the company.
We learned that it can be difficult to prepare journal entries associated with the issuance of preferred and common stocks and the declaration and payment of dividends. The board of directors must always authorize all dividends. A dividend distributes cash, assets, or the company's stock. This is distributed to the company's stakeholders. Before authorizing a dividend, a company must have sufficient retained earnings and cash (cash dividend) or sufficient authorized stock (stock dividend). Before cash dividends are issued to stockholders, the following conditions must exist: the board of directors declares them, a sufficient cash balance is on hand, and a sufficient appropriated retained earnings balance exists. We also learned that there are differences on the balance sheet when cash dividends and stock dividends are issued. There are changes in the balance sheet when cash dividends are declared and distributed because it affects the assets and liabilities of the corporation. The cash and dividends payable
What are five reasons why a company may choose to buy back their own stock? A company will buy back its own stock more a multiple of reason. The company may need to issue shares to its officers and employees under bonus and stock compensation plans. Maybe the company wants to enhance the stock’s market value, by having fewer stocks out in the market the value can go up. A company may be trying to buy another company and in order to finalize the purchase the company may need to promise stocks during the buyout. If the company does not have enough stocks to close the deal it will need to buy back some stocks. A simple reason is buying back stocks has the potential to increase the earnings a share may be worth. The last reason is to avoid a hostile takeover, if a company has many disgruntled investors the company could be on the verge of a takeover so a company will buy back stocks to change the percentage of ownership within the company.
We learned that it can be difficult to prepare journal entries associated with the issuance of preferred and common stocks and the declaration and payment of dividends. The board of directors must always authorize all dividends. A dividend distributes cash, assets, or the company's stock. This is distributed to the company's stakeholders. Before authorizing a dividend, a company must have sufficient retained earnings and cash (cash dividend) or sufficient authorized stock (stock dividend). Before cash dividends are issued to stockholders, the following conditions must exist: the board of directors declares them, a sufficient cash balance is on hand, and a sufficient appropriated retained earnings balance exists. We also learned that there are differences on the balance sheet when cash dividends and stock dividends are issued. There are changes in the balance sheet when cash dividends are declared and distributed because it affects the assets and liabilities of the corporation. The cash and dividends payable